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Beyond Traditional Microfinance: Financial Inclusion for Unbanked Kenyans

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  • Ali, Abdelrahman Elzahi Saaid

    (The Islamic Research and Teaching Institute (IRTI))

Abstract

This study investigates whether Kenya would be able to achieve better financial inclusion by going beyond traditional microfinance through the adoption of mobile microfinance, rather than just transfering and receiving through mobile money. The study used survey and structured questionnaires to check the readiness of the unbanked Kenyan community, microfinance providers, mobile operators, and the government for adopting effective mobile microfinance. The results showed that the unbanked Kenya are engaged in microfinance enabled jobs such as self-employment and retailers. The community, which was found to be highly connected with mobile phone has a lower awareness of mobile microfinance. While respondents admitted using electronic payment on limited situations, cash is still the dominated medium of making payment. Since the unbanked Kenyan are living in remote areas, mobile microfinance would help to improve their access to finance through reducing the cost of services, minimizing the physical distance to the access point, better documentation, and improving outreach by opening the untapped markets. The results recommend that mobile microfinance intuitions and mobile operators need to exert joint efforts to promote more awareness and develop appropriate mobile microfinance products. On the other hand, the regulator intervention is needed to eradicate barriers such as high tariff, bad corporate governance, and dispute resolution.

Suggested Citation

  • Ali, Abdelrahman Elzahi Saaid, 2016. "Beyond Traditional Microfinance: Financial Inclusion for Unbanked Kenyans," Working Papers 2016-12, The Islamic Research and Teaching Institute (IRTI).
    • Handle: RePEc:ris:irtiwp:2016_012
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    References listed on IDEAS

    as
    1. Dylan Higgins & Jake Kendall & Ben Lyon, 2012. "Mobile Money Usage Patterns of Kenyan Small and Medium Enterprises," Innovations: Technology, Governance, Globalization, MIT Press, vol. 7(2), pages 67-81, April.
    2. AfDB AfDB, . "Annual Report 2012," Annual Report, African Development Bank, number 461.
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    More about this item

    Keywords

    Financial Inclusion; Mobile Microfinance; unbanked community;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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