Financial services associations (FSAs) are rural community-level member based semi-informal financial institutions, that are a hybrid of savings and credit cooperative organizations (SACCOs) and microfinance institutions (MFIs).
Financial Sector Deepening Kenya (FSD Kenya) has been supporting the transformation of FSAs into credible financial institutions since 2005 through K-Rep Fedha Services (KFS) with the presumption that FSAs are serving a distinct segment of the population from that served by the banks and MFIs. The current phase of this support is aimed at the creation of a fully sustainable FSA network within the current financial sector prudential regulatory framework. Overall, there has been business growth within the network of FSAs as well as KFS (current operational self-sustainability stands at 109%); hence there are good prospects for long- term sustainability.
FSD Kenya’s continued support to the FSAs is informed by increasing FSA membership rather than by an empirical assessment of the value and impact of FSAs for lower-income households and the causal mechanisms through which this is achieved. In line with its 2016 to 2020 strategy that aims to create value through financial inclusion, FSD Kenya engaged BFA to assess the impact of FSAs on building livelihoods of the poor and to explore opportunities to deliver additional value to these target households.
1. Read the first blog in this 3-part series: Financial services associations: an imperfect solution
2. Read the second blog here: FSA asset financing: when paying more yields more.
3. Read the third blog here: The use of mobile money technology: a dividend or disaster for FSA’s?
4. To learn, download the full FSA impact report and learn about how FSAs fit a niche that is not covered by formal providers, click here.
BFA. (2017). The impact of financial services associations. Nairobi, Kenya: FSD Kenya.