Beyond Traditional Microfinance: Financial Inclusion for Unbanked Kenyans

Kenya is a leading economic country with most developed traditional microfinance when compared to its neighbourhood countries. Despite that, the country banked population rate remains stagnant at a lower level. Recently, Kenya exerts more efforts to adopt mobile money, which enables the country to achieve relatively high financial inclusion compared to before. This study investigated whether the country would be able to achieve better financial inclusion by going beyond traditional microfinance through the adoption of mobile microfinance, rather than just transferring and receiving through mobile money. Hence, 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. In addition, this study also describes the benefits accrued to them.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 of this study 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.