Kenya – Financial Access Study Performed by the Steadman Group

Methodology Sampling based on the CBS NASSEP IV sampling frame Drawn from all 69 districts Random selection of cluster, household and individual Sample size achieved of 4,218 Distribution of the samples (individuals aged 16 and over)

Results overview Outreach of financial service providers Financial access strand Usage of savings, credit, money transfer and insurance Informal groups Technology Youth

Outreach of financial service providers

Financial Access Strand

Bank Account Usage by Province

Financial access by main source of income Most of the banked work: –for a wage in a large establishment –in their own business Most of the unbanked get income by –producing food crops –transfers from family / friends

Characteristics of the banked / unbanked Majority of the banked: –are male –have secondary education or higher –own a mobile phone Most of the unbanked: –are female. –more likely to have little education –have no access to a mobile phone

Usage of savings products

Usage of credit products

Usage of money transfer services Transfers within Kenya Mostly informal using family / friend or matatu Transfers outside Kenya Mostly formal using transfer agencies or a bank account

Usage of insurance products *multiple responses were spontaneously mentioned by interviewees

Informal groups Typical group activities – Give one member all monies collected in one round Raise money for emergencies Raise money for funerals Lend money to members when they need it

Mobile phone usage

Youth – 16/17 year olds Source of income 5% with formal services 2% with indirect access through guardian One in three earn a living in agriculture

Analysis of the Data

Supply: banking services follows formal economy…

Supply bank penetration is driven by the size of the market

Informal finance: Formal and informal finance are not substitutes

Informal finance Banked and unserved use of informal credit and savings equally

Financial “Exclusion” Factors: Cost / Affordability –Low incomes / cash balances (not worth banking –Access barriers (opening / minimum balances) –Transactions costs (transport, time) Availability of Informal (cheaper) alternatives –Shopkeepers / suppliers: credit –Friends, family, savings, credit, insurance, remittances. –Matatu / buses: remittances Unavailability (Northeastern)

Increasing outreach & demand: Cost cutting innovations to make affordable banking servicescommercially viable –Cellular phone banking –Alternatives, low cost outlets, agencies. –Product innovation e.g. over the counter savings products. Promoting SACCOs outside formal employment / cash crop agriculture Promoting payments / savings oriented MFI’s.