Financial Trends in Kenya: Insights from the 2024 FinAccess Survey

Kenya continues to make strides in financial inclusion and awareness, but the latest data from the 2024 FinAccess Household Survey highlights a mix of progress, challenges, and emerging behavioral shifts. Here’s what the numbers reveal:

1. Financial Access: A Remarkable 90% Inclusion Rate

Financial inclusion, encompassing both formal and informal access, now stands at 90%, a commendable increase. This reflects sustained efforts in broadening access to financial services across the country. However, nuances in sub-regional and urban-rural dynamics tell a different story:

• Nairobi county ranks top in formal financial inclusion with 93.3% (94.4 % both formal and informal access), followed closely by Kiambu with 93.2% (96.8% total) and Kirinyaga 93.0% (95.8% total).

• West Pokot has the lowest (49.6%) percentage of formal financial inclusion, and Turkana a 30.9% complete financial exclusion.

• Counties with the highest reliance on informal access include West Pokot at 25%, with Mandera showing minimal informal access at 1%.

• Urban areas report a rise in the usage of savings and deposit instruments, reaching 76%.

• Rural areas, on the other hand, saw a decline to 62%, signaling a need for targeted interventions to promote savings culture outside urban centers.

  
  

These trends expose the need to tailor financial products and outreach efforts to rural populations, ensuring equitable inclusion.

2. Financial Access by Type

Financial access by service type in 2024 was highest for mobile money, with 82% of respondents currently using the service, while 5% used it previously and 13% have never used it.

Banks (including mobile banking) followed, with 53% currently using, 35% having used it before, and 13% never having access. Commercial banks had 29% of users currently active, while 58% previously used the service and 13% never had access.

For mobile banking, 33% currently use it, 11% had used it before, and 56% never used it.

Access to Chama groups showed 28% of respondents currently participating, while a significant 62% had been part of one before, leaving 10% who never accessed it.

In overdraft services like Fuliza, 18% currently use it, 15% used it before, and 67% never had access. For NHIF, 20% currently use it, 13% had used it before, and 68% never accessed it.

Lower levels of financial access were seen in insurance (including NHIF) and pension services (including NSSF), where only 12% reported current usage for both. Notably, SACCOs and NSSF showed 12% and 11% current usage, respectively, with most respondents never accessing these services.

Finally, digital loan apps and MFIs saw the least access, with 95% and 84%, respectively, stating they never used these services.

3. Gambling: A Changing Narrative

11% of Kenyan households have gambles in the previous 12 months. Male gamblers were at 18% while female gamblers were at 4%.

The use of mobile money is at 98% for gambling.

Kenyan attitudes toward gambling as a source of income have shifted significantly:

• Only 11% view gambling as a good way to make money, compared to 20% in 2019.

• 85% outright reject gambling as a viable income source, reflecting heightened awareness of its risks.

  
  

However, counties like Lamu (28%) and Nyandarua (25%) still show higher acceptance rates. This suggests regional differences in perceptions, possibly driven by economic opportunities or cultural factors. Continued efforts in financial education are crucial to dispelling myths around gambling as an income strategy.

4. Insurance and Pension Uptake: Room for Growth

While financial inclusion has surged, the uptake of insurance and pension instruments remains relatively low:

• Only 19% of Kenyans have insurance coverage, and 12% are enrolled in pension schemes.

• The biggest barrier to insurance adoption is a lack of perceived value, with 76% citing this as their primary reason.

  
  

Interestingly, affordability concerns are more pronounced in rural areas (28%) than in urban areas (16%). This highlights the need for affordable and accessible micro-insurance products tailored to rural populations.

5. Challenges in Investment Adoption

Investment uptake lags behind other financial products, with only 3% of Kenyans engaging in investment instruments. This reflects a broader issue of financial literacy and risk aversion, which must be addressed through targeted education campaigns.

6. Gender Parity in Financial Inclusion

The 2024 data reveals that the gender gap in financial access and usage has narrowed significantly in some areas, while disparities persist in others:

Access to Financial Services

• Formal and Informal Access:

  • No significant difference in exclusion rates (0 percentage points).

  • Females marginally lead in informal access (-1 percentage point), reflecting their reliance on community-based solutions like savings groups (chamas).

    
    

Credit Usage

• Men are 3 percentage points more likely to use credit services, suggesting that females may face challenges in accessing credit due to cultural norms or systemic barriers.

  
  

Financial Health

• A notable 8 percentage points difference favors men, indicating that women report lower financial health. This disparity could be attributed to income gaps, caregiving responsibilities, or lower participation in higher-return financial activities.

  
  

Savings and Deposits

• While men and women show comparable savings habits overall (+1 percentage point difference), disparities exist in:

  • Informal Groups: Women lead by a significant margin (-15 percentage points), highlighting their reliance on community-based solutions.

  • Banks and Digital Loan Apps: Men lead by 12 and 1 percentage points, respectively, pointing to differences in trust, access, or product design.

    
    

Use of Financial Service Providers

• The largest gaps are evident in:

  • Insurance: Men lead by 12 percentage points, reflecting a need to make insurance products more accessible and appealing to women.

  • SACCOs: Men have a 4 percentage points lead, indicating potential barriers to female participation in cooperative savings.

  • Mobile Money: The gender gap is minimal (+2 percentage points), showing near parity in this vital service.

    
    

7. Financial Loss Across Channels

Percentage of Users Losing Money by Channel (2013-2024):

• Key Insight: Mobile money consistently shows the highest percentage of users losing money, peaking at 18% in 2024.

  
  

• Notable Trends:

  • Banks and microfinance institutions maintain relatively low and stable loss rates (around 3%-10%).

  • App-based loans and informal groups exhibit minimal impact on losses, staying below 5% throughout the years.

    
    

• Primary Reasons for Loss Using Mobile Money (2024):

  • Key Insight: A staggering 70% of losses are due to funds sent to the wrong number.

  • Other reasons, like reversed genuine transactions, contribute to 16% of losses, while other potential reasons (e.g., hoax SMS or phone calls) have no significant impact in 2024.

    
    

• Challenges with Financial Services:

  • Mobile Banking:

    • Unexpected Charges are the most cited challenge, with a steady reduction from 65% in 2019 to 6% in 2024.

    • System Downtime issues fell from 20% in 2019 to 3% in 2024.

  • Bank Accounts:

    • Challenges decreased sharply, with unexpected charges dropping from 36% in 2019 to 11% in 2024.

  • Mobile Money:

    • Unexpected Charges rose slightly from 20% in 2019 to 21% in 2024, while system-related issues stayed under control.

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8. Financial Health Overview

Overall Financial Health:

• Key Insight: Financial health in Kenya has declined steadily, with only 18% of adults classified as financially healthy in 2024 compared to 39% in 2016.

• Not Financially Healthy: This group has grown to 82%, signaling worsening economic conditions or financial management challenges.

  
  

Regional Analysis:

• Best-Performing Counties:

  • Nairobi City leads at 36% financially healthy adults, followed by Kajiado (33%) and Bomet (29%).

    
    

• Worst-Performing Counties:

  • Turkana, Lamu, and Siaya recorded the lowest financial health rates (1%-5%).

    
    

• Key Observation: Urban counties like Nairobi and Kajiado show better financial health, likely due to access to more diverse financial services and opportunities.

  
  

• Gender-Based Analysis:

  • Key Insight: Financial health is notably lower among women (15%) compared to men (22%) in 2024.

  • Trends (2016-2024):

    • Both genders show a sharp decline from 2016, where 45% of men and 34% of women were financially healthy.

      
      

Key Insights and Actionable Points

1. Financial Inclusion Gaps

   • Develop targeted financial literacy programs for marginalized counties like Turkana and West Pokot.

   • Scale affordable formal financial solutions tailored for rural and informal economies.

2. Mobile Money Dominance

   • Leverage mobile money’s success to cross-sell savings, insurance, and investment products.

   • Address over-reliance on mobile money by improving accessibility to banking services in rural areas.

3. Savings Decline in Rural Areas

   • Promote community-based savings models (e.g., SACCOs and chamas) with digital integration for rural populations.

   • Introduce incentives to encourage formal savings habits outside urban centers.

4. Low Insurance and Pension Uptake

   • Design micro-insurance and micro-pension products tailored for affordability, especially in rural areas.

   • Conduct awareness campaigns to address the lack of perceived value for insurance (76%).

5. Investment Uptake Lags

   • Run financial education campaigns focused on demystifying investments, reducing risk aversion, and educating on available investment options.

   • Partner with fintech platforms to offer user-friendly investment tools.

6. Gender Financial Disparities

   • Increase access to credit for women through gender-targeted financial products.

   • Strengthen financial health programs for women, focusing on higher-return activities like investments.

7. Gambling Risks

   • Intensify financial literacy to combat gambling myths in high-acceptance counties like Lamu and Nyandarua.

8. Financial Loss via Mobile Money

   • Mobile money providers should put in place stringent measures aimed at reducing these transaction mistakes and the fraud that sometimes comes with it.

   • Mobile money providers to simplify transaction reversal processes.

9. Decline in Financial Health

   • Expand access to tools for budgeting, debt management, and savings to address financial strain.

   • This issue could also point to a larger economic downturn issue. The onus should therefore be on the government to enforce measures that cushion the public, especially tax-wise.

   • Support income-boosting initiatives, particularly in counties with low financial health (e.g., Turkana and Lamu).