Cash Still Accounts for 80% of Daily Transactions in Kenya, Says Latest 2022 FSD Report

While mobile money use has continued to climb in Kenya, 80% of all transactions registered in the country in 2021 were cash-based, according to FSD (Financial Sector Deepening Kenya), an independent body that has tracked financial inclusion in Kenya since 2001.

This latest data highlights the challenge of low financial health despite the impressive growth of Kennya’s financial inclusion rates.

“But beneath its headline success story, falling financial health and growing disparities in financial usage point to underlying challenges that compromise the ability of financial inclusion to deliver on its promise for inclusive and sustainable growth.“

– Financial Sector Deepening (FSD)

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It is estimated that 84% of the Kenyan population has access to at least basic financial services thanks to the near-pervasiveness of mobile money, with financial inclusion rising from just 26.7% about ten years ago.

Moreover, according to FSD, “the gains in financial inclusion over the years have helped Kenyans bridge short-term liquidity needs and reduced gender gap in access to formal finance, mainly driven by women’s uptake of mobile money for remittances and small business activities.”

However, despite that contribution, the data still shows a significant disconnect between access and its outcomes for financial health, with FSD noting that “only 21.8% have the ability to simultaneously manage their finances to secure basic daily needs, be resilient to unexpected shocks, and invest in their livelihoods and the future, with only 0.4% of those who experienced a shock turning to insurance as their main coping device.”

Some of the weaknesses limiting Kenya’s positive financial inclusion narrative include:

• In-effective regulation
• Lack of inclusive and penetrating growth
• Services are not always available
• Barriers to entry for fintech players

While Kenya was noted as one of the more resilient countries to COVID-19, the pandemic has nonetheless dragged 2 million into poverty, according to the World Bank.

According to FSD, the costs of the pandemic have fallen especially strongly on women, informal enterprises, and children.

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