Kenya’s financial sector comprises of banking, insurance, capital markets, pension schemes and other banking institutions such as savings and credit cooperative societies (SACCOs), microfinance institutions (MFIs), building societies and development finance institutions (DFIs), amongst others. These are all regulated by the Central Bank of Kenya.
Kenya’s financial sector is the largest in the East and Central African region, and requires investment to allow the micro financial sector reach its full potential, as well as the investment banking, lease hire and housing finance sectors.
Kenya is East Africa’s financial services hub, with 43 commercial banks, 12 microfinance banks, and one mortgage company. Its well-established banking industry includes many international firms including Barclays and Standard Chartered, and serves both the domestic and regional markets. Nairobi’s vibrant stock market attracts significant overseas investment. Alongside traditional ‘bricks and mortar’ banks, there has been a recent surge in mobile or virtual banking, which reaches the large number of unbanked Kenyans who never had a bank account before now.
The sector posted the slowest growth since 2012 to stand at 6.9 percent in2016 compared to 9.4 per cent in 2015. The relatively depressed performance was mainly as a result of a decelerated growth of 6.7 per cent in earnings from banking institutions partly due to uncertainty associated with the capping interest rates that came into effect in September 2016. The Nairobi Securities Exchange (NSE), Sub-Saharan Africa’s third largest after South Africa’s and Nigeria’s, lists 63 companies and has a total market capitalisation of €18 billion, or 31 per cent of GDP in 2016. A derivatives market was launched in 2014, part of the Kenyan Government’s efforts to reclassify from a frontier to an emerging market.
Kenya ranks well in Africa for loan access, venture capital, and equity financing. Financial inclusion is improving: FSD calculated by 2016 that 75.3 per cent of Kenyans can afford and access financial services, a 50 per cent increase in a decade and now the third highest proportion in Africa after South Africa and Mauritius. Access to affordable credit has allowed businesses to expand, and create jobs.
Opportunities in Financial Services:
- Funding Micro Finance Institutions as they transform into banks
- Participating to lending to banks to finance infrastructure projects
- Secure financial systems for banks and Micro Finance Institutions
- Innovations in mobile banking applications