Ways we can overcome barriers to financial inclusion


Financial inclusion is the universal access to a wide range of financial services. These are provided by a variety of sound and sustainable institutions, at a reasonable cost. Efforts to overcome barriers to financial inclusion in Kenya aim to reduce poverty, create employment and advance sustainable economic development.

Most of the Kenyans earning at, just above or even below the minimum wage are locked out of formal financial systems. They have little to no access to financial services that can help them improve their lives and incomes.

Attributed barriers to inclusive finance have been noted as supply-side and demand-side barriers.

Supply-side barriers involve high costs of accessing financial services, both monetary and time-wise. The minimum bank balances set by the banks and ledger fees for maintaining micro-accounts are too high for majority of common folk. A lack of traditional physical collateral, inappropriate products, and perceived high risk and lack of information are also prominent supply-side barriers to financial inclusion in Kenya.

Banks are structured to cater to the financially able and businesses that show a history of profitability. Only recently, and to a minimum degree, have banks tried their hand in financing start-ups. And this was made possible, firstly, by partnering with other agencies to share risk. This only goes to show by how much financial inclusion is yet to be actualized.

Onto Demand-side barriers, low income earners lack regular pay checks and their income levels are too low anyway for much banking. Their money usually goes directly to living expenses. Financial illiteracy with regards to budgeting, saving and banking are other notable contributors towards this lack of financial inclusion for all. To overcome barriers to financial inclusion, cultural, religious and social barriers, like where some communities discourage banking, should be considered.


Reforms made to tackle the barriers to financial inclusion, in this country, include ERSWEC (Economic Recovery Strategy for Wealth and Employment Creation) and Vision 2030. ERSWEC aims at macroeconomic stability,  plus strengthening institutions and governance. It also has objectives of rehabilitating and expanding physical infrastructure, and investing in human capital of the poor.

Kenya Vision 2030 has set its aim at transforming Kenya into an industrialized, middle income country, which will provide high quality of life to all its citizens by 2030. Its three pillars are on Economic, Political and Social wellbeing.

Specific reforms that can increase financial inclusion include embracing the revolution of digital financial services, taking microfinance to the community, and democratizing banking using the agency banking model. Others that are proven are expanding access to credit, servicing niche markets, like setting up Sharia compliant banking, and connecting Kenyans to the money markets. A prominent attempt at the latter can be seen in m-akiba and treasury mobile direct.

If the reforms are fully implemented, to overcome barriers to financial inclusion, there would be an expansion of the banking sector in Kenya. This would be by increased access to financial services, increased supply of financial services, lower barriers to transacting in the banking sector. Consumers, however, need financial literacy education even as financial inclusion expands. This is to avoid vulnerability to the financial system. Consumers need to appreciate the complexity of the financial system and of their rights.

A point to note

Reliance on technology as digital innovations increase in the financial sector must be met with the highest standards of resilience, reliability, scalability and privacy. The systems in place must remain robust and secure in order to mitigate risks of fraud, cyber-attacks and breach of privacy and other new risks.


About Author


Winnie is a freelance writer specializing across a broad range of topics. She is also a full time banker at Co-operative Bank of Kenya.

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