Medium term plan for Kenya’s financial services sector

May 27th, 2024

The financial services sector is recognised under the Government of Kenya’s Vision 2030 long-term national development framework as a priority sector under the economic pillar.

Under the Kenya Vision 2030, medium-term planning is set out in a series of five-year plans with sector ministries responsible for detailed Medium-Term Plans (MTPs) for each sector which are consolidated into a single national MTP. As the Ministry responsible for financial sector policy, The National Treasury and Economic Planning is responsible for the development of the MTPs for the financial services sector.

From 2022 to 2023, FSD Kenya provided technical assistance to The National Treasury and Economic Planning for the development of the fourth Medium Term Plan for the financial services sector. The plan, that covers the five-year period from 2023 to 2027, is the fourth in a series of MTPs with the predecessor plan covering the period 2018-2022. The 2023 to 2027 Medium-Term Plan establishes a clear strategy for the development of Kenya’s financial sector and identifies a series of key sector-wide transformational projects and programmes for implementation over the period. Its development was informed by the aspirations set in the Kenya Vision 2030, the Bottom-Up Economic Transformation Agenda and global and regional development commitments including the UN 2030 Agenda for sustainable development.

From an inclusive finance perspective, the plan lays a strong foundation for achieving sustainable impact and provides the basis for far-reaching change in the sector. Seven of the plan’s flagship projects have a direct impact on inclusive and sustainable finance. The digital finance project is aimed at leveraging the technological gains made in Kenya’s financial sector to lay the foundational infrastructure for Kenya’s new digital economy. This includes efforts led by the Central Bank of Kenya to implement the payments systems interoperability project aimed at establishing an inclusive, competitive, efficient and interoperable retail payments system in Kenya. The Kenya credit guarantee scheme project aims to enhance access to credit to Micro, Small and Medium Enterprises that remain an underserved yet significant segment of Kenya’s economy. At the retail level, the financial inclusion fund (hustler fund) seeks to leverage Kenya’s financial system to facilitate the disbursement of credit to households and MSMEs. Given the importance of the agriculture sector in Kenya’s economy, the agriculture and rural finance project aims to enhance access to finance to Kenya’s agricultural sector and support the Government’s agricultural transformation and inclusive growth agenda. This is complemented by the rural Kenya financial inclusion facility aimed at contributing to income growth and improved livelihoods in rural areas.  Lastly, given the increased vulnerabilities due to climate-related risks, the green finance project is aimed at creating the enabling environment for attracting green finance and investments needed to transition to a low-carbon, climate resilient and green economy.

The plan provides an impetus for real change. There are multiple ways through which FSD Kenya continues to support the Government of Kenya’s development aims including the successful implementation of the plan. These include undertaking research to build the case for change; facilitating broad-based consultations and coordination; providing direct technical inputs; complementing capacity to support implementation; and many more.

However, the starting point is premised on building trust with policymakers and wider stakeholders and the extent to which FSD Kenya is recognised to be genuinely offering value and motivated by a shared agenda. Over the years, FSD Kenya has clearly established its credentials in the inclusive finance agenda to most of the players in Kenya’s financial sector including policymakers. This provides a strong foundation from which to work with the Government of Kenya towards the successful implementation of the plan.

This blog is one of the articles in FSD Kenya’s 2023 annual report. To read the full report, click here. 




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