29 June 2016

Financial Inclusion: The Mobile Banking Revolution in Kenya

Examining the impact of mobile banking on levels of financial inclusion in Africa through the lens of Kenya.

Financial inclusion rates in Kenya are more than double those in other sub-Saharan countries. The transformation has been rapid: from 2006 to 2015 adults using formal financial services tripled, rising from 26.7 to 75.3%. Adults totally excluded from formal financial services dropped by more than half, falling from 41.3 to 17.4 percent.

The mobile banking industry within Kenya has driven the country’s overall financial inclusion rates. In 2014, 58.4% of all adults had a mobile account and approximately 90 percent of all senders and recipients of domestic remittances used a mobile phone. The primary driver of change has been the extraordinary success since 2007 of Safaricom’s M-PESA. What, however, are the real impacts of these technological and business model innovations on levels of financial inclusion and poverty reduction?

The report, “A Quantum Leap Over High Hurdles to Financial Inclusion: The Mobile Banking Revolution in Kenya”, focuses on sub-Saharan Africa, through the lens of Kenya. It reveals that as a result of mobile banking Kenya’s financial inclusion rates have increased dramatically; however, the research also states that Kenya’s success may not be easily replicated in other developing countries.

by Jay Rosengard

  • Harvard Kennedy School

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