How digital boom has aided financial inclusion in Kenya

The latest FinAccess Survey (2021) confirms one thing; That financial inclusion in Kenya would be impossible without the current digital boom.

According to the survey, formal access rose from 83 per cent (2019) to 84 per cent (2021) thanks to innovative technology and growth in fintech while use of informal sources to access financial services declined to 4.7 per cent (2021) from 6.1 per cent (2019).

In addition, use of informal groups declined to 28.7 per cent in 2021 from 30.1 per cent in 2019 implying increas-ing formality.

Rising inclusion means access to credit, which is essential to building wealth (starting a business, increasing stock or financing education), means many across the country can now improve their livelihoods.

That said, of keen interest to me were two highlights; betting and where most people get their financial advice.

On the former, the survey indicated that only 13.9 per cent of respondents actively engaged in betting last year.

The study noted that those who perceive betting as a source of income declined from 22.7 per cent in 2019 to 11.2 per cent in 2021, with an average amount used for betting per week declining from Sh2,559 in 2019 to Sh939 in 2021.

Further, it said the frequency of betting declined in 2021 compared to 2019. Now, I must say I was happy to read this development.

It is clear evidence that (sports) betting is a sure fail proposition.

And not only has the course of time revealed this, it’s a case proven that betting is not investing. It is not risk-free. It is not just a game and that it has serious real life consequences.

But before I am labelled a “hater”, like most fans, I welcome innovations that make watching sports more fun and engaging. Nonetheless, to exploit our enthusiasm without regard to our financial well-being is absolutely wrong.

On financial advice, the finding was rather concerning; that almost half (45 per cent) of the population relied on friends and family members to get financial advice, with formal institutions playing a peripheral role.

Challenges cited by respondents included; fraud through loss of money, unexpected transaction charges, lack of transparency in the pricing of financial services and products, in addition to system downtime that affected the quality of services received.

Clearly, this is testament that most financial institutions need to step up, democratise financial advice possibly through digital means.

On the other hand, while it’s commendable that the masses were seeking advice, they should know the quality of the advice matters too. Getting professional advice is the best thing one can do especially in today’s world where there’s no shortage of so-called “advice”.

A financial adviser can and will help; provide objective insights into your finances, put in place a comprehensive financial or business plan to meet goals, ensure one’s investments are diversified in order to lower risk, help re-structure loans, helps prevent emotional investing, especially during periods of market volatility, etc.

Mwanyasi is the managing director at Canaan Capital