Kenya’s financial sector is fast developing into a model for Sub-Saharan African region, indicates the latest report by the International Monetary Fund (IMF).
Besides boasting of a well-developed banking system, Kenya’s micro-finance institutions have been praised for their role in deepening financial inclusion among groups such as women and youths who have traditionally been left out of the financial system.
The report also cites Kenya as one of the countries that are contributing to a new phenomenon dubbed Pan-African banking.
The IMF report urges Sub-Saharan countries to emulate Kenya and Angola by increasing bank competition, reduce transaction costs and encourage the development of mobile banking so as to deepen financial inclusion.
The IMF’s Regional Economic Outlook notes that such efforts could go a long way in addressing insufficient infrastructure for physical access and promoting financial literacy in countries with low access to financial services.
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Mobile banking has been highly embraced in the country with money transfer playing a critical role to this end. “Now, it is possible for customers to get loans and even re-pay them using their mobile phones,” indicates the report.
Other Sub-Saharan African countries could benefit from Kenya’s successful experience in augmenting financial access through microfinance institutions, states the report.
The report gives the example of the Kenyan Women Finance Trust (KWFT), a micro finance bank which offers micro credit to women and singles out the use of private firms to deepen financial inclusion.
There are 43 licensed commercial banks and one mortgage finance company that makes Kenya with the highest numbers of banks compared to its peers across the continent.
The IMF report notes that cross-border banking has been an important channel for regional financial integration in sub-Saharan Africa, with the number of foreign subsidiaries operating in the region more than doubling between 2005 and 2012.
Kenya is one of the countries that have contributed to the growth of Pan-African banking. Equity Bank, Kenya Commercial Bank Ltd and Co-operative Bank of Kenya are some of the banks thathave opened outlets in the region and beyond. Equity Bank is the latest to venture further afield after acquiring ProCredit Bank in the Democratic Republic of Congo (DRC).
Other countries in which Pan-African banking concept has gained ground include Nigeria and South Africa.