The Financial Inclusion Conference & Investor Expo 2024 (FINCON 2024) provided a platform for key stakeholders in Kenya’s microfinance sector to discuss challenges, opportunities, and strategies for advancing financial inclusion. Several key themes and actionable insights emerged from the discussions, shaping the way forward for Microfinance institutions (MFIs) and Microfinance banks (MFBs).
A central theme of the conference was the importance of collaboration between the public and private sectors to enhance financial inclusion. By working together, financial institutions and government bodies can create policies that support access to financial services for underserved communities. The conclusion to this discussion was to develop strategic partnerships between microfinance institutions and resources and also to promote regulatory frameworks that encourage innovation while ensuring consumer protection.
The Hustler Fund, a key initiative under Kenya’s Bottom-Up Economic Agenda (BETA), was highlighted as an opportunity to deepen financial access for small businesses and informal sector players. Since MFIs and MFBs serve similar market segments, they can integrate their systems to support the fund’s sustainability. It was proposed that AMFI-K should play a role in guaranteeing MFIs and MFBs that access the Hustler Fund to ensure responsible lending and effective fund utilization.
Participation in the formulation and implementation of the National Financial Inclusion strategy was also one of the themes that emerged during the conference. The National Financial Inclusion Strategy is currently being developed by the Government of Kenya, and stakeholders in the microfinance sector were urged to participate actively in shaping this policy. It was then proposed that AMFI-K and its members should engage with policymakers to ensure that the strategy aligns with the realities and needs of MFIs, MFBs, and their customers.
Several speakers called upon the government to come up with guarantee schemes that they can leverage to enhance financial inclusion. One of the key barriers to financial inclusion is the perception of risk in lending to micro, small, and medium enterprises (MSMEs). But with the establishment of government-backed credit guarantee schemes to encourage financial institutions to lend to co-operatives and MSMEs will help mitigate these risks and encourage more lending. Therefore the government should establish structured guarantee programs to incentivize financial institutions to lend to cooperatives and MSMEs. While MFIs and MFBs should work with the Ministry of Cooperatives and MSMEs to co-develop sustainable credit guarantee models.
There was a strong emphasis on green finance products that promote climate resilience and environmental sustainability. Financial institutions were encouraged to integrate environmental, social, and governance (ESG) principles into their operations. In the same vein they were urged to develop financial products that support renewable energy, sustainable agriculture, and eco-friendly businesses. And also adopt ESG reporting to demonstrate commitment to sustainable finance.
Financial literacy was a major discussion point, with speakers emphasizing the need to empower customers with knowledge beyond just credit access. Historically, MFIs provided training on business planning and financial management, but with declining donor support, this service has diminished. To fill this gap AMFI-K is to collaborate with development partners to revive financial literacy programs. MFIs and MFBs to incorporate financial education into their service delivery to help customers make informed financial decisions.
Investing in research and development was identified as a key driver of innovation in the sector. Financial institutions must develop solutions that are not only commercially viable but also improve customers’ financial well-being. MFIs and MFBs need to conduct market research to understand evolving customer needs and design financial products accordingly. And also prioritize affordability and transparency in product offerings to build long-term customer trust.
