Financial Inclusion and Poverty Reduction in Kenya

Abstract

Purpose: The aim of the study was to assess the financial inclusion and poverty reduction in Kenya.

Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.

Findings: The study found that access to financial services, including savings, credit, insurance, and payment services, has been associated with increased income levels, asset accumulation, and improved overall well-being among low-income individuals and marginalized communities. Moreover, financial inclusion initiatives, such as microfinance programs and digital payment systems, have demonstrated positive impacts on reducing poverty by fostering entrepreneurship, enhancing access to capital for small businesses, and promoting economic resilience among vulnerable populations. However, challenges such as limited access to formal financial institutions, inadequate financial literacy, and exclusionary practices continue to hinder the full realization of the potential benefits of financial inclusion in poverty reduction efforts. Ongoing study and policy interventions are crucial to address these barriers and ensure that financial inclusion strategies are effectively tailored to the needs of disadvantaged groups, thus contributing to sustainable poverty alleviation and inclusive economic development.

Implications to Theory, Practice and Policy: Financial capability theory, social capital theory and inclusive growth theory may be used to anchor future studies on assessing the financial inclusion and poverty reduction in Kenya. In terms of practical contributions, it's essential to design and implement targeted financial education and literacy programs that specifically cater to vulnerable and underserved populations, including women, rural communities, and informal sector workers. From a policy standpoint, there should be a strong advocacy for the integration of financial inclusion objectives into national and regional poverty reduction strategies, development plans, and sustainable development agendas.