Financial inclusion and development: Recent evidence of agency banking in Kenya

Global and national-level policy makers have been embracing financial inclusion as an important development priority. Financial inclusion is highly topical globally hence made one of its pillars at the G20 2009 Pittsburgh Summit. By end-2013, more than 50 national-level policy-making and regulatory bodies had publicly committed to financial inclusion strategies for their countries. The World Bank in October 2013 postulated the global goal of universal access to basic transaction services as an important milestone toward full financial inclusion - a world where everyone has access and can use the financial services to capture opportunities and reduce vulnerability. Policy makers have articulated these objectives in the conviction that financial inclusion can help reduce poverty, improve household welfare and spur economic activity. It is recognised that technologies can play a crucial role in this endeavour. In this paper, we assess developments in technologies and deploying agency banking as a strategy adopted by commercial banks to bring on board vast majority of the population in Kenya resulting to a third of banking transaction handled at agency level. This paper is in four parts, starting with the introduction of financial inclusion followed by background of agency banking including exploring how access and use of financial services can benefit the majority of the marginalised people. Methodology is in section three. Literature review summarizes recent empirical impact evidence at the microeconomic, local economy, and macroeconomic levels and how inclusive, low-cost financial systems can generate additional, indirect benefits for other public-sector and private-sector efforts. Data analysis of agency banking in Kenya comes next before conclusions and implications in section six ending the paper. The results show that financial inclusion in Kenya through agency banking model brought lots of marginalised people and communities on the financial platform easing transaction time, reducing vulnerabilities, smoothing consumption patterns and outreaching remotest areas of Kenya, among others.