May 6th, 2025

The latest FinAccess survey, launched in December 2024, reached a large audience both in person and online. The extensive media coverage of its key findings highlight’s the level of public engagement in the pressing questions raised by the survey, which speak to issues at the heart of Kenya’s economy and financial sector. Here, we delve deeper into the data and the critical questions it raises.

Financial Access

Has financial access plateau-ed?  Kenya’s financial inclusion growth has been underpinned by mobile money.  However, flattening trendlines suggest that access has plateau-ed in recent years.

Youth and financial exclusion Stubborn areas of exclusion persist, particularly in rural areas and among youth aged. Nearly a third of youth aged 18-25 (who make up 57% of the excluded) do not have formal accounts. Lack of IDs are a major barrier to financial inclusion for youth; but for rural youth, the more significant barrier is lack of phones, indicating rural poverty.

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Rural/Urban Divide

Rural youth exclusion highlights a persistent rural/urban divide. As youth exclusion indicates, this is driven by rural poverty and lower levels of access to digital technology. The rural/urban divide in financial access goes hand in hand with deepening economic inequality. However, FinAccess shows that rural areas are ahead of urban areas in green investment, suggesting that investing in green development and broadening access to technology in rural areas could help bridge the divide.

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Gender Gap

Digital technology has played a major role in reducing the gender gap in financial inclusion, which has now narrowed to 1.6%.This is significantly lower than the 6% average for developing economies. However, the parity in digital account ownership is not mirrored in access to other formal financial services. For example, only 46.5% of women have banking products compared to 58.9% of men. The gap reverses in the case of chamas (informal groups), indicating a formal/informal divide in the financing choices of women and men. How can we further close the gender gap in banking, SACCOs, pensions, insurance? Can we empower women to leverage informal finance more effectively to create bridges into the formal economy and strengthen their ability to manage day to day, cope with risk and invest in the future?

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The population is becoming more digitised.

Digitisation and financial Services

FinAccess 2024 shows a significant increase in digitisation. More people have smartphones, use the internet, and employ sophisticated payment methods such as bank till numbers which enhance information between borrowers and lenders. There has been a significant rise in use mobile money versus cash for daily needs, bills, school fees, and medical payments, and more people are receiving income digitally. Over half of all mobile money users (53%) now use their accounts daily- which translates into 44% of the adult population. How can we better leverage Kenya’s digital finance to enhance wellbeing and growth by making services more affordable, empowering users with greater control over their data and financial choices, and reducing the frictions caused by concerns over increased government oversight and taxation?

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Kenya’s financial landscape is diverse; but how many Kenyans have access to these products and services?

Kenya has a rich formal and informal financial landscape comprised of traditional formal services like banks, SACCOs, pensions, insurance; newer digital services like mobile banking, mobile money overdrafts (Fuliza), digital app-base finance; and a plethora of informal services from chamas to shopkeeper credit. However, since 2019 the percentage of the population using these different services has essentially remained the same, or, in the case of insurance, actually reduced. Notable exceptions include mobile banking where the percentage of users rose by nearly 7 percentage points between 2021 and 2024; and the Hustler Fund which saw a significant uptake since its launch in 2022. At the same over a third (34%) of Kenya’s formally included ONLY use their mobile wallet. These users transact, borrow (e.g. Fuliza) and save on their mobile wallets, but do not use any other formal service. How can we ensure that Kenya’s diverse financial sector is more accessible to all?

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The focus of finance has shifted; prioritising daily needs over growth and investment

The percentage of the population who save has dropped for the first time since 2009. Meanwhile, a rising percentage of Kenyan borrowers are struggling to pay back loans, suggesting a growing exposure to risk. At the same time, both savings and credit are increasingly being used for daily needs and emergencies rather than investment- even for wealthier groups like MSEs and the employed.  This raises critical questions: is Kenya’s financial inclusion landscape encouraging borrowing at the expense of savings and thereby exposing consumers to growing levels of risk; are we sacrificing long-term growth for short-term survival; and what does this mean for financial health?

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Financial Health stays low; people continue to turn to informal and non-financial strategies to meet financial needs

Financial health remains low at 18% of the population financially healthy compared with 84% financially included. This is partly driven by low use of formal finance to meet financial needs such as managing liquidity, dealing with shocks and investing in opportunities and goals. Instead, people continue to rely on informal strategies (especially assistance from family and friends), and non-financial strategies such as working more, to meet these needs. What kinds of partnerships are needed to enable finance to play a stronger role in boosting resilience, wellbeing and people’s futures?

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Green Finance

On a positive note, despite the risks and challenges they face, rural households are leading Kenya’s green economy. 41% of rural residents make green investments compared with 26% of urbanites. Top green investments are in solar energy and tree planting- this is partly driven by high cost and unavailability of electricity in rural areas; urbanites are more likely than their rural counterparts to invest in efficient cookstoves. Kenyans mainly rely on their income reinvested or assistance from friends and family to finance these investments. An exception is solar energy where there is substantial reliance on loans, showing that financiers are supporting households and farms to transition towards solar. Can finance do more to support rural communities to steer the country towards a greener future?

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Conclusion

Digital finance continues to drive financial access. For those with digital accounts (82%), over half use their accounts daily. Uptake of mobile banking has also increased by 7 percentage points, showing the importance of digitisation in deepening financial access beyond the mobile wallet. Digitisation has resulted in major gains for gender equality, reducing the gender divide in formal account ownership to 1.6%. However, a rural/urban digital divide still persists and youth exclusion is on the rise, with concerning implications for financial and economic inclusion.

There is a concerning shift in the use of finance for daily needs and emergencies rather than investment, indicating that finance is not driving growth effectively. Financial services which offer larger, lower-interest loans and encourage savings- such as such as traditional banks, SACCOs and chamas- reach only a small percentage of the population. This suggests that the gains in financial access brought about by digital technology are primarily focused on expanding high-volume, low-value markets for liquidity rather than innovating to expand access to financial solutions that support long-term growth and resilience. Coupled with macroeconomic conditions, this may partly explain why financial health remains low despite high levels of formal financial inclusion.

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This blog is one of the articles in FSD Kenya’s 2024 annual report. Click here to read the full report (PDF). 

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