Financial inclusion key to progress

Financial inclusion is a crucial enabler of inclusive growth, especially in achieving the Kenya Vision 2030 and attaining some of the Sustainable Development Goals (SDGs).

The World Bank defines financial inclusion as when households and businesses have access to more useful and affordable financial products and services that meet their needs in terms of transactions, payments, credit and insurance delivered in a responsible ,affordable and sustainable way and not credit growth.

The formal financial inclusion remains average in developing and emerging markets. In Kenya, the 2019 FinAccess Households survey revealed an increase in formal financial inclusion to 82.9 per cent, from 26.7 per cent in 2006. But complete exclusion narrowed to 11 per cent from 41.3 per cent in 2006, hence an urgent need to increase of financial access services.

Mobile money technology development, especially M-Pesa, has been a fundamental tool in enhancing significant financial inclusion mainly to unbanked and poor people. Every minute,3,900 people buy airtime, 1,500 receive money, 1,700 pay for bills and services, 240 deposit or withdraw from banks and more than 15 businesses make payments via M-Pesa.

High-level financial literacy

For further financial inclusion, financially empower women, youth and persons with disabilities (PWD) by financial institutions enhancing the ability of this demographic cohort to make basic evidence-based financial decisions.

Secondly, have sound and robust institutional structure to improve and expand financial inclusion through partnerships, collaborations and participation of government agencies, private sector, civil society and regulators. Thirdly, enhance consumer protection, key to promoting confidence in digital financial services. Regulators must ensure customers are treated fairly. 

Fourth, ensure high-level financial literacy. Consumers who are more financially literate are able to make better financial decisions. Fifth, have pro-consumer-friendly financial infrastructure development that supports transparency and accountability in the financial system.

Mr Ombane is an economist. [email protected]