Kenya leads Africa in financial inclusion, with 82.9% of the adult population enjoying access to one financial product or more in 2019.
Kenya is also a regional leader in fintech, with more than 150 fintech startups covering services from money transfer to credit.
Conventional wisdom suggests that more financial inclusion will lead to development by providing financing to SMBs.
Kenya’s growth numbers — projected at 6% for 2020 — suggest the strategy works, although correlation does not prove causation.
But although financial inclusion is one of the UN’s 2030 Sustainable Development Goals, more access to financial products is not an end in itself.
How can we tell if more financial inclusion benefits the Kenyan people?
A permissive regulatory environment has contributed to the growth of fintech in Kenya. But new digital lenders sprout daily, and it is worth exploring how many of those lenders are exploitative.
The country’s Credit Reference Bureau, or CRB, maintains a list of blacklisted borrowers that approaches three million in number. Some of those blacklisted failed to repay loans as little as $2.
Of particular concern are “blind loans” and “lend-to-learn” schemes, which can cause credit bubbles and tend to target the vulnerable.
A friendly regulatory environment creates low entry barriers, which is good for stimulating activity, but sometimes bad for consumers.
Getting the balance right is key to Kenya fostering true financial inclusion in a way that supports the broader economy — not just the fintech sector.
