Kenya is making progress in deepening access to financial services as the number of those not reached by the services reduced to 6.1 million from 6.7 million in 2006. According to a financial access trends study in Kenya (FinAccess) conducted by the Financial Sector Deepening Trust and Central Bank of Kenya in 2009, commercial banks and micro-finance institutions registered remarkable progress in deepening their outreach.

Presenting results of the study, Kenya’s cooperative development and marketing minister Joseph Nyagah said that according to the 2009 study, remittance of money through mobile telephones raised the transaction services whereby 39.9% of those surveyed claim to have used M-PESA more than users of any other financial institution or product in Kenya, with the service reaching those from both formal and informal sectors.

 SACCO Growth

According to the study SACCOs in Kenya have recorded an impressive growth from 1970s and by the end of 2011, the active saccos were serving about 4.5 million members. They had mobilized deposits and share capital amounting to US $ 2.25 billion (KES 189 billion) and loans to members amounting to  US $ 2.25 billion (KES 189 billion). The total assets and deposits of the SACCOs stood at US $ 2.95 billion (KES 248 billion) and US $ 2.1 billion (KES 180 billion) by close of 2011.

The financial access study was based on review of formal financial sectors like banks, non-bank financial institutions, savings and credit cooperative societies (SACCOs), micro-finance institutions (MFIs), informal financial services providers and unbanked group.

Speaking at the Enhancing Financial Innovation and Access (EFInA) Forum held in Abuja, Nigeria on September 18, 2012, Nyagah noted that SACCOs had lost their market share in spite of geographical spread in the country compared to other financial providers.

Competition from Banks

“According to the financial access 2009, the SACCOs loss of customers is attributed to the competition from banks through proactive outreach by offering easy access transaction accounts as well as consumer loans. The other factor is the attrition of the SACCO’s market base as a result of retirements in the public sector and preference by younger employees to patronize banks,” he said.

At the end of 2011, Kenya’s financial co-operatives accounted for 60 per cent of the 14,126 registered cooperatives, forming the most active segment of the country’s co-operative. However, only half (4,062) of the registered financial cooperatives were active as at end of 2011, with 3,887 of the 4,062 being SACCOs while the rest were housing and investment cooperatives.

 Nyagah added that another study of the financial access trends would be conducted in 2013, adding that the cooperative development ministry expects to register further progress in reducing the number of those excluded from formal financial services in Kenya.

Also read [African SACCO Summit Comes to Nairobi] and [Sacco Loans Saving Kenyans from High Interest Rates]

Courtesy; Press Release