Technology

Kenya ranked among countries stepping up financial inclusion

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M-Pesa has driven usage of financial products. PHOTO | FILE

Kenya has been ranked among 30 developing countries in Africa that is furthering financial inclusion, a new MasterCard study reports.

The study dubbed a ‘‘Progressive Approach to Financial Inclusion’’ explores the progress that 30 developed and developing countries—including South Africa, Nigeria, Tanzania, Uganda and Egypt — have made in enabling access to and driving usage of different financial products including payments, lending, long-term savings or investments, and insurance.

Kenya is in a ‘payments ready’ stage when it comes to adoption, with 85 per cent of adults holding a bank, mobile, prepaid or other payment product.

A ‘payments ready’ country displays a high penetration of payments products at a rate of more than 75 per cent, but less than 95 per cent, according to the researchers’ metrics.

However, based on usage of payment products the report indicates , Kenya moves back to the ‘early days’ stage, with only two per cent of consumer purchases made electronically, despite 75 per cent of adults receiving money via non-cash means.

This means that while Kenyans receive a large percentage of their income electronically, they are not using their electronic payment products to transact and depend on cash to do so.

“While Kenya is making significant advances in the ownership of payment products, there is a need to address the gaps in infrastructure and education, which will result in better adoption and usage of the payment products already in existence,” said James Wainaina, vice president and area business head.

“As we continue to develop market-relevant payment products, we are confident that we will see this realised.”

Lending, long term saving and investment and insurance rates in Kenya were found to be at 13.6 per cent, 43 per cent and 3.4 per cent, respectively.

The report highlights that financial inclusion is a progressive measure, with payments as the optimal entry point. In almost all the African countries studied, payment product adoption exceeds the adoption of the other products studied, although local factors affect the different products in different ways.

“The public and private sector must identify current adoption and usage gaps, and actively pursue ways to close these gaps to boost the rate of financial inclusion,’’ said Mr Wainaina.