July 1st, 2016

Drawing from the latest FinAccess household survey, this graph explores the relationship between how widely used a particular financial instrument is among Kenya’s poorest 40% and how highly valued that financial instrument is to its users.

The big four: Mobile money, savings with a ROSCA or ASCA, secret cash savings at home and credit from the social network (which mostly includes inter-personal loans from friends and family and shopkeepers) emerge as the financial instruments that are both highly used by – and carry primary importance to – the mass market. One hypothesis is that these instruments are the “bread and butter” or “Ugali” of financial services that people use on a more frequent basis and jointly cater sufficiently well to a majority of people’s week to week financial needs such as bridging temporary cash flow gaps, keeping money safe and sending money to others.  Other services, like a loan from a chama or M-Shwari, might still be important but at a secondary level and used only conditionally when a specific need arises.

Niche, but valued: Other services like conventional accounts with a bank or SACCO, savings with M-Shwari and NHIF are not used widely, but are highly valued among those who use these services. These instruments seemed poised for growth but their usage has not diffused broadly. It will be interesting to track how this picture evolves in the next few years.

In the next few months FSD Kenya will be digging deeper to better understand these patterns and will be extracting insights from our research to identify the drivers of demand for financial services in Kenya, stay tuned!

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