n AfricaGrowth Agenda - The unbanked and under-banked markets in Kenya. Challenges of banking Kenya's informal economy

Volume 2010, Issue 1
  • ISSN : 1811-5187


Many banks in Kenya are rushing to offer banking services to the huge pool of the unbanked and under-banked in a seemingly headlong rush to tap into the "fortune at the bottom of the pyramid." These banks need to first understand the unbanked and under-banked. That understanding will then bring them face to face with the needs of the unbanked and under-banked in ways that they may find surprising - and surprisingly beyond their current offerings. Formal sector banks in Kenya as currently constituted may find that they cannot fundamentally deliver to this market.

The banking needs of the unbanked and under banked are increasingly indistinguishable from the needs of the informal economy. Banks that want a slice of this market at the intersection of the informal and formal economies are welcome to stay. The main channel of serving the unbanked and under banked needs to recognize the dominance of the informal economy in employment, with up to 85% of Kenya's working age population deriving their livelihoods from the informal economy.

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