When one thinks of Africa in financial terms, it is usually South Africa and Nigeria that come to mind as the two biggest economies. However, Kenya has been growing steadily and strongly over the years, particularly with respect to the financial industry in Kenya. Prior to 2007, Kenya was experiencing real GDP growth of almost 6% a year. This is the type of growth that most western countries can only dream of. Unfortunately, 2008 was a bad year for Kenya – not only was there a global financial melt-down, but there was also a lot of post-election violence in the country. This led to the thriving export industry slowing down, and tourism, which is Kenya’s lifeblood, also slowed down dramatically. The country is now re-bounding strongly, and is currently achieving growth rates of about 5%.
The financial sector
It is the financial sector where the real growth in Kenya has taken place, and it is this that is driving up the GDP growth in the main (along with tourism, construction and agriculture). From official figures, in 2011 already there were 43 commercial banks operating with a network of 1,100 branches and over 2,200 ATM machines throughout the country. Kenya has also established a credit-reference bureau and survived the banking crisis in 2008, thanks largely to a Central Bank that maintains tight controls. Credit is still available, but the Kenyan banks wisely monitored their relationship with foreign banks during the post-crash 2008 years to minimize their risk and vulnerability. There are financial industry reviews available in Kenya that can document the success of this sector of the economy.
Given that the economy is still developing and that entrepreneurship is key to the income of many, it stands to reason that there will be many microfinance institutions in place. Like many other places in Africa, the Kenya Post Office also has a Savings Bank – it can take deposits and lend money to those who don’t have easy access to a commercial bank. However, these formal institutions are rolling out on a large scale throughout the country.
Mobile banking
If you consult a financial industry review in Kenya, you will learn that Kenya is particularly strong, some say the strongest in the world, in the area of mobile banking. It operates a platform known as M-Pesa, and this allows for the transfer of money and other banking options through mobile phones. This is another situation that is typical of Africa. With the infrastructure existing largely in cities and towns, the rural areas remain underdeveloped, and it is through cellular technology that much of business is now being conducted. M-Pesa launched only in March 2010, and it very quickly had over 17 million customers.
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