FSD Kenya Insights on Youth and Agri Finance

FSD Kenya, which aims to create value through financial inclusion, have just released their 2017 Annual Report which contains findings from ongoing research projects around Kenya.  

Some excerpts 

  • The unregulated digital credit space in Kenya, mainly phone loans, has overtaken other forms of credit in the country with 19% paying digital loans, much more than 17% repaying family/friends or 14% paying shopkeepers for goods taken on credit. 
  • 45% of borrowers through mobile phones are now female. Usage has shifted from day-to-day to investing in businesses, but 14% are (900,000 individual) are juggling multiple loans, and half have defaulted or delayed loan repayment.
  • Tweaking Agri-Finance: There is lack of access of credit to agriculture which receives just 4% of banking credit. This could be partly due to lack of data so they are partnering with M-Kopa Labs to research other models. Hall of M-Kopa customers make money from agriculture and buy solar products so the research aims to see of if the pay-as-you-go model can be applied to other products like farm inputs, water tanks, fertilizer, animal feed etc.
  • Youth Finance products: 40% of the population is under 15 years but youth are underserved by the banking sector. They see money as a means of survival and savings as being for buying something not long-term or unanticipated needs. There is a lack of appropriate financial products for the youth, and this could be because older adults are the ones developing financial solution for the youth. One outcome of this research, funded by Funded by SIDA and the Bill and Melinda Gates Foundation could be a new class of lending to the youth, a development by FSD Kenya and the Kenya Bankers Association. 

  • They are also involved in the Kenya Hunger Safety Net program in which the government transfers Kshs 20 billion ($200 million) a year to people over 70 years.
  • Visiting economist John Kay gave a lecture where he advised that Kenya should develop local financial solution and not adopt western financial models.
  • Smartphone uptake still low, but USSD is how Kenyans can access robust banking services with cheap handsets.

Leave a Reply

Your email address will not be published. Required fields are marked *