In the past five years, digital loans have transformed the market for credit in Kenya. For millions of adults, the possibility of borrowing from their phones has opened the door to private, formal consumer credit for the first time.
Joseph and Alice are not real people, but the impact of behavioral research on consumer protection is anything but hypothetical. Across the world, consumer protection authorities have been using behavioral research to inform everything from post-financial crisis rules for mortgage brokers to regulations on new mobile and app-based financial services.
In countries as diverse as the United Kingdom, India, and Mexico, there is momentum to increase consumers’ ability to access, manage, and control their digital identity and history.
“…fintech innovations need to be more inclusive, easier to use, and designers should work harder to provide greater consumer protection and empowerment.”
Five years after Kenya launched the world’s first digital credit solution, the market for digital credit has expanded rapidly in Kenya and many low-income countries. But exactly how big is the market? Who’s using digital credit? And what impact is it having on low-income customers?
In an effort to understand the real needs of the people, our seventh ‘Field Friday’ exercise took us to Karagita in Naivasha. We set out to gather insights on which financial services people use and which ones they trust most.
Find out what percentage of adults are using a range of formal and informal financial services and products in Kenya, overall and for sub-groups of the population defined by age, gender, wealth, geographic location and education.
Which financial services are perceived to be the most important to Kenyans, and why? This interactive heat map draws from the 2016 FinAccess household survey and displays the percentage of people using a range of financial services
The telecom sector in Kenya has experienced phenomenal growth over the past decade. Mobile phone penetration has topped 90%, with 78% of Kenyan adults now owning a working mobile phone.
At 29, Annette is already a widow. When we met her, she lived in a rented house now near a shopping centre along the main road in Vihiga. Her in-laws were never very fond of her, and after her husband’s death they chased her off the land where the two were living.
How exactly do financial services impact low income Kenyans? In this note, we extract the stories of eight respondent households from the Financial Diaries.
Duncan was born in the rural community in Vihiga where he still lives today. His father died when he was six years old. His mother struggled to take care of her children alone. Because of that financial pressure, Duncan did not go to high school and instead began working from a young age.
For Lucy, the trouble started early. As exams approached at the end of primary school, her parents were fighting. Her father was drinking a lot and had a number of mistresses. They quarreled openly; nothing was normal at home.
Matthew has been a hustler for as long as he can remember. He did well in primary school and wanted to go on to a good secondary school. But, his mother at home was paralyzed and couldn’t work. His father, he says, “Is just a farmer, you know. He doesn’t take this issue of school seriously.”
Henry, one of eight children, was only able to go to school until form two, the second year of secondary school, when his parents had to pull him out because they could no longer afford the fees.
Janet and Joseph have been together for 50 years. Janet had been in school up to class seven, when she dropped out, pregnant with their first child. She was eighteen years old. They stayed together at Joseph’s rural home for a few years until he decided to move to Kericho and look for work.
Compared to most households in her community in Makueni, Magdalene has been doing pretty well. She earned most of her income in the Diaries from selling clothes on market days around the county.
Ernest grew up in a rural area in Kenya’s Central region and help from family enabled him to move to Nairobi for accounting studies in 1998 after finishing high school. He completed Certified Public Accounting training up to section four, but found it hard to get a job. In 2003, he found himself desperate.
Self-employment is a major source of income for low income Kenyans, and Financial Diaries respondents are no exception. When we talked to respondents in 2015, two years after the close of the original Diaries, those whose economic lives were improving pointed to business returns as one of the main drivers of their success.
Our third “Field Friday” exercise reveals lessons for formal financial service providers to learn from informal services.
In late 2015, we followed up with Financial Diaries households to check in on their economic lives two years after the initial Diaries study ended. We wanted to know how they are doing now, the factors driving changes in their economic lives, and the role that financial services and financial choices were playing in their economic trajectories.
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