A new report reveals the untapped potential of SACCOs in enhancing financial inclusion and economic growth through international remittances , particularly in rural and underserved areas.
The study, titled The role of SACCOs as international remittance providers in Kenya, was conducted to uncover the challenges and opportunities within the SACCO remittances landscape, particularly in rural communities, and to highlight the potential for SACCOs to enhance inclusive finance. It reveals that while remittances to Kenya reached USD 4.19 billion in 2023, SACCOs direct participation is limited due to regulatory and operational challenges.
Conducted by Financial Sector Deepening Kenya (FSD Kenya) and the Sacco Societies Regulatory Authority (SASRA), and funded by the International Fund for Agricultural Development (IFAD), the study analyses the demand, supply, and regulatory landscape of remittances in Kenya, focusing on the current and potential role of SACCOs.
The study covered an analysis of demand side, supply side, and regulatory diagnostics. A total of 110 respondents from Kenyans in the diaspora and households remittance receivers were interviewed for the demand-side. On the supply side and regulatory diagnostics, 140 regulated SACCOs participated in an online survey, with 36 engaging in follow-up interviews. The research also involved 21 Financial Service Providers (FSPs), 3 regulatory bodies, and 5 government agencies.
To address these challenges, the report proposes two strategic pathways for integrating SACCOs into Kenya’s remittance market:
Strategy 1 focuses on enhancing existing partnerships between SACCOs and established Remittance Service Providers (Banks, MFIs, Money Transfer Organisations). This approach would enable SACCOs to expand their remittance services within the current regulatory framework.
Strategy 2 calls for the deeper regulatory reforms among which the establishment of a SACCO shared services platform, such as the planned SACCO Central. This centralised platform would provide the necessary infrastructure and regulatory framework for SACCOs to collectively participate in the remittance market, enabling greater efficiency and reach.
The report underscores the need for collaborative action among SACCOs, policymakers, regulators, and development partners to overcome the identified challenges. Key recommendations include:
The role of SACCOs as international remittance providers in Kenya report
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