Majority of Kenyans Lack Bank Accounts, Large Proportion battling Credit Access, reveals Recent Study

In Kenya, financial inclusion has seen a significant rise over the past decade, with 84% of the population now having access to at least basic financial services. This remarkable growth is largely due to the near-pervasiveness of mobile money, making financial services more accessible than ever before.

One of the latest developments in this field is the plan to set up a central liquidity facility for Savings and Credit Co-operative Societies (SACCOs). This initiative aims to enable SACCOs to lend to each other, similar to interbank lending, fostering a more interconnected and resilient financial ecosystem. SACCOs, a popular means for regular people to grow their finances, account for approximately 7% of the Kenyan GDP.

The rise in financial inclusion has had a profound impact on the lives of many Kenyans, particularly the underserved. Mobile-based lending has become key to their financial wellbeing, serving as an entry point to formal financial systems for those without credit history. Research shows that financial health improved significantly for these borrowers, despite the challenges posed by the new risks introduced by mobile lending, such as over-indebtedness due to lack of financial knowledge.

Despite this impressive growth, a challenge persists: low financial health. A 2022 report by FSD Kenya highlights this issue, showing that cash still accounts for approximately 80% of daily transactions in Kenya. This indicates that while access to financial services has improved, effective management of these resources remains a challenge for many Kenyans.

Kenyans deposited a record $6.3 billion in SACCOs, local savings schemes, in 2023, demonstrating a growing trust in these financial institutions. However, 87% of Kenyans still struggle with access to credit, having never had approved loans for approximately $25. This underscores the need for continued efforts to improve financial inclusion and access to credit.

Digital lending in Kenya is a key lifeline for many, with 65% of Kenyans not having a bank account and 45% of borrowers on digital platforms lacking a formal credit rating. This highlights the importance of digital financial services in bridging the gap for those excluded from traditional banking.

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Majority of Kenyans Lack Bank Accounts, Large Proportion battling Credit Access, reveals Recent Study