November 15th, 2023

Kenya has made progress in the reach of formal accounts, with 84% of Kenyans now having an account with a formal financial institution. However, if we look a little deeper, we find that nearly half of the formally included (42%) ONLY have a mobile money account. Is this really financial inclusion?

In order to develop a more meaningful measure of financial inclusion, FSD Kenya collaborated with MPensa Impact Development to explore new indicators that measure individuals’ use of a range of financial products and services beyond transaction accounts. The indexes proposed in a paper below assess the extent to which Kenyans are not just able to transact, but also to save, borrow, be insured and have a pension.

The paper examines 6 different indicators, formal and informal, to derive a weighted score for individuals across time. The indicators enable the authors to track the progress of Kenya’s financial inclusion journey across the population and for different segments since 2006; understand where the gaps are for different population groups (e.g. women vs men; rural vs urban), examine the impacts on financial inclusion of key developments such as digital technology and COVID-19; and assess the extent to which financial inclusion in Kenya is deepening or resolving inequality. 

The paper is exploratory in nature, suggesting new ways to measure financial inclusion beyond the current binary measure (ownership of a formal account). In taking this forward, the intention is to select and refine one or more of the measures proposed, to track and communicate the extent to which Kenyans are financially included beyond the ownership of formal accounts.

Click here for the full publication

Click here for a slide deck based on the full publication by Mariangela Pensa and Davide Castelliani, M-Pensa Impact & Development  Services presented at the Financial Inclusion Statistics Conference 2022

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