Kenya has been feted around the world for its achievements in advancing financial inclusion. And the speed at which access to the formal financial system has advanced has certainly been exceptional. The development of a near ubiquitous mobile phone-based payments system provided the foundations for a further round of fintech innovation. Nairobi has become the Silicon Savannah, heavily focused on financial services, and attracting capital from both commercial and impact investors.
But alongside this digital dynamism, there remains heavy criticism of the financial system. Pricing has been a perennial concern. Questions are being asked about the extent to which the new consumers of finance are adequately protected. Recent survey evidence suggests that the financial health of the average Kenyan has worsened over the last three years. And businesses – especially smaller scale – continue to cite lack of finance as a constraint to growth.
As we come to the end of 2019, we reach the half-way point for implementation of Kenya’s long-term national development plan Vision 2030. Can we benefit from a little 2020 hindsight next year as we look forward to how the financial system needs to develop, if we are to accomplish the goals of Vision 2030? While the gains made in financial inclusion have been extraordinary these have not translated into the developmental impacts originally posited. National savings have not reached the levels sought to sustain the required investment for economic transformation. The stark facts suggest that Kenya has yet to create the financial system it needs to achieve its ambitions for national development over the next decade. If this is the case, then what choices does Kenya have and can a bolder path be taken?
There are unlikely to be any simple answers to these questions. But we can hope to at least illuminate the way ahead by examining the lessons from past successes and failures.