Information and Communication About Personal Finance Issues In Kenya

The global development community is devoting considerable energy and funds to microcredit lending and other financial innovations that may cater to segments of the population who traditionally have had limited access to commercial savings, credit and money transfer services.

Kenya has been a trailblazer in the promising area of mobile phone-based financial services, which are reaching many previously “unbanked” individuals; indeed, mobile money transfers are now conducted by millions of Kenyans, and the case study in this chapter focuses on using the AudienceScapes data to identify the profiles of these users and what part information flows play in their usage patterns. More generally, the AudienceScapes survey approached finance issues from an information perspective to determine whether and/or how Kenyans are learning about various services, with the aim of pinpointing information gaps that might be filled by development organizations.

Respondents were first asked to recall the last time they received or obtained some information about various financial topics or services (Chart 1). It may not be surprising to learn that Kenyans seem to be most readily exposed to information about mobile money services in comparison to other financial topics covered in the survey.

Chart 1
                      

Less regular exposure to information about borrowing money or about government subsidies or pensions (fewer than half of respondents had received information on these topics in the last month, and far fewer received information in the last week) may simply reflect lower interest in those topics, or that few respondents needed such services. However, at least one quarter of all respondents also expressed dissatisfaction with the information currently available to them about those same topics (Chart 2). This suggests a real quality or quantity gap between the information they would like to get on these topics and the information they currently can access, and a potential area for intervention to close this gap.

Chart 2
               

Based on this analysis, the information gap appears to be much narrower for bank accounts, money transfers and mobile money; even for those issues, though, a sizable minority of respondents expressed dissatisfaction in either the quantity or quality of information available to them. The results suggest that there is ample room for development organizations and financial product vendors to deliver better information about personal finance to a broad range of Kenyans.

There also appears to be scope for newer technologies to play a role in delivering that information, given that mobile phones are becoming widespread in Kenya and are a popular platform for financial services. For example, fewer than 10 percent of those surveyed said they had received information on a financial topic via mobile phone (that is, via SMS services)—even information about mobile financial services (Chart 3). Presumably, many mobile phone users would be reachable via SMS—though they may not be willing to pay for information to be delivered that way.

Chart 3
              

While radio is by far the most common source of general information about personal finance topics, word-of-mouth also plays a prominent role and should be integrated into any financial communication program. More specifically, word-of-mouth sources were dominated by friends and family members more than by financial experts such as bankers or financial advisors, raising issues of whether the types of word-of-mouth information received by most people is accurate and reliable.

Indeed, trust in various sources of financial information varied widely. For the last three categories listed in Table 1 below, about one quarter of all respondents answered “Don’t know” and did not express an opinion on the trustworthiness of information, suggesting that the problem is more a lack of familiarity with the sources than it is an active distrust of the information they provide.

Table 1
                  

One potential cause for concern is that the majority of respondents characterized financial information provided by friends and family as only somewhat trustworthy, yet they are the most widely cited source of information about informal savings/borrowing and the second-most widely cited source for other financial topics. Development organizations might try to improve the situation by communicating directly with opinion leaders to ensure that those hubs of word-of-mouth information are providing the same information as more trusted sources such as radio, TV and financial experts.

Looking more closely at the most basic financial services—saving and borrowing—we are able to distinguish between formal banking (commercial banks and cooperatives) and informal banking services such as savings clubs, money lenders, and “chama” (informal joint saving and investment groups). As might be expected, information about informal banking services largely travels through informal channels (Chart 4).

Chart 4
                 

About 30 percent of those surveyed had access to one type of banking (formal or informal) and not the other. Notably, traditionally marginalized groups (women, rural residents and the poor) were more likely to have access to informal than formal banking, while youth were more likely to have access to formal than informal banking (Table 2).

The differences among these groups are even more dramatic for actual use of banking services (within the last year), which is substantially lower overall than access. These differences provide context for the finding that communication about formal and informal banking take separate routes, and are reaching somewhat different audiences.

Table 2
           

The survey data also point to a correlation between the degree of information gathering on financial topics and the degree of use of financial services. For example, those who obtained information about bank accounts recently were far more likely to have a bank account compared to those who received information less recently or not at all. The same is true for saving at a bank, or saving with informal banking services. The data cannot tell us whether receiving information about banking more frequently makes people more likely to use financial services, but it does show information and use are related.

Click Below to Access a Different Development Topic