Kenya
Table 6.3
161
Financial Services Coverage in Kenya, 2007
Province Nairobi Rift Valley Central Coast Eastern Nyanza Western North Eastern Total
Branch network as of 2007 (% of all branches)
Population with bank accounts (% per province)
Cooperative Bank of Kenyaa (% of total)
42 14 14 13 6 7 3 1 100
38 20 24 15 15 12 11 — n.a.
27 5 15 5 17 15 15 .. 100
Sources: Central Bank, FSD Kenya 2007, Safaricom M-PESA brochure, and Cooperative Bank of Kenya website (http://www.co-opbank.co.ke ). Note: — = negligible. a. Cooperative Bank of Kenya is a major agent of MoneyGram and a bank for SACCOs.
banking services. M-PESA, the mobile-phone money transfer service, does not necessarily work in partnership with the banking institutions; it may also function as a freestanding RSP. However, the ability to receive communication signals, the extent of mobile phone ownership, and population size are major factors that influence the overall number of MTOs in the various regions. Posta services are also widespread, with a significant rural network of 900 branches. In 2005, Posta introduced an electronic fund transfer service. PostaPay sends and receives money instantly from various destinations and can be accessed in more than 300 outlets countrywide. However, it receives heavy competition from the mobile-phone money transfer service, M-PESA. With the 2007 introduction of M-PESA by Safaricom, the leading mobile telecommunications provider in Kenya, access to partial financial services has improved, especially for the unbanked. M-PESA has made it easy to send money domestically at low cost. It is also becoming a major challenge to the banking institutions that have long dominated the local market because it is improving the money transfer technology while also reducing money transfer charges. This is an important innovation, especially for those who cannot access traditional banking services. As box 6.1 describes in more detail, M-PESA has provided a domestic remittance channel throughout Kenya that competes, among the unbanked, not only with the semi-formal and informal sector but also with the financial institutions. M-PESA has about 14,000 agents spread all over the country, 60 percent of whom serve rural areas.