FSD KENYA: TEN YEARS OF A MARKET SYSTEMS APPROACH IN THE KENYAN FINANCE MARKET

The document evaluates FSD Kenya's role in expanding financial inclusion from 27.4% in 2006 to 66.7% in 2013. It highlights successes in capacity building for banks (notably Equity Bank), facilitating the regulatory environment for M-Pesa, and developing public infrastructure like credit information sharing and an interbank payments switch. However, it notes failures in the SACCO sector and limited impact on the 'real economy' (agriculture and SMEs) due to misaligned incentives. The study concludes that while the financial system is more inclusive, the primary beneficiaries have been those above the poverty line and the supply-side providers.

• Kenya experienced a dramatic increase in formal financial inclusion, with the proportion of adults with access to formal providers rising from 27.4% in 2006 to 66.7% in 2013, representing 8 million additional people.
• FSD Kenya's capacity-building efforts with commercial banks were highly successful, particularly with Equity Bank, which grew its credit portfolio by 346% between 2006 and 2008 while reducing loans at risk from 13.2% to 8.6%.
• Interventions in the SACCO sector were largely unsuccessful because FSD Kenya underestimated the strength of informal rules and the lack of incentives for SACCOs to change, despite investing $2.3 million in capacity-building between 2006 and 2010.
• FSD Kenya played a critical role in the success of M-Pesa by using its relationship with the Central Bank of Kenya (CBK) to create a conducive regulatory environment, specifically by helping the CBK issue a 'Letter of no Objection' to Vodafone.
• The M-Shwari product, supported by FSD Kenya with $0.65 million, reached over 11 million accounts by 2015, though its primary beneficiaries were skewed toward those above the poverty line.
• FSD Kenya facilitated the development of essential public infrastructure, including a credit information sharing (CIS) system and an interoperable payments 'Switch', though these required long-term engagement (6-8 years) to achieve progress.
• Efforts to impact the 'real economy' were largely unsuccessful; value chain finance (VCF) projects in agriculture failed due to a lack of technical leadership and lukewarm commitment from finance providers.
• The 'Making Markets Work for the Poor' (M4P) approach was vindicated by the overall results, but the study notes that the financial market now works 'even more' for those above the poverty line and the supply-side (banks), whose profits increased 3.5-fold between 2005 and 2013.
• The organizational form of an independent trust provided FSD Kenya with significant operational advantages in flexibility, neutrality, and efficiency, with 88% of spend going to programmes compared to 60-70% in contracted-out models.

APA

Gibson, A. (2016). FSD KENYA: TEN YEARS OF A MARKET SYSTEMS APPROACH IN THE KENYAN FINANCE MARKET. FSD Africa. https://fsdafrica.org/wp-content/uploads/2025/05/FSD-Impact-Study.pdf

Chicago

Gibson, Alan. FSD KENYA: TEN YEARS OF A MARKET SYSTEMS APPROACH IN THE KENYAN FINANCE MARKET. FSD Africa, 2016. https://fsdafrica.org/wp-content/uploads/2025/05/FSD-Impact-Study.pdf.

Wikipedia

{{cite report |last1=Gibson |first1=Alan |title=FSD KENYA: TEN YEARS OF A MARKET SYSTEMS APPROACH IN THE KENYAN FINANCE MARKET |publisher=FSD Africa |date=August 2016 |url=https://fsdafrica.org/wp-content/uploads/2025/05/FSD-Impact-Study.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{gibson2016fsd, author = {Gibson, Alan}, title = {{FSD KENYA: TEN YEARS OF A MARKET SYSTEMS APPROACH IN THE KENYAN FINANCE MARKET}}, institution = {FSD Africa}, year = {2016}, month = aug, url = {https://fsdafrica.org/wp-content/uploads/2025/05/FSD-Impact-Study.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }