The Effect Of Agent Banking On Financial Inclusion In Kenya
Financial inclusion of the total population of a country people is every government’s goal. The world over and especially in the developing countries, governments are working on various strategies and regulatory frameworks to ensure they reach all those excluded. Every governments dream is to have an efficient and inclusive financial system for purposes of resource mobilization. In Kenya, Vision 2030 is premised on a safe, efficient and inclusive financial system where savings and investment rates will more than double. The financial sector is expected to play a pivotal role in mobilizing the substantial resources required to finance the envisaged flagship projects. The government through the central bank has therefore been trying exploring and implementing innovative models that will deepen Kenya’s financial sector to support savings and investment growth. One of the initiatives has been the agent banking model The objective of the study therefore was to investigate the relationship between agent banking and financial inclusion in Kenya. The study utilized descriptive survey research method so as to elicit a broad range of information from various sources identified from the research area. In summary, the study investigated agent banking in Kenya with emphasis on the factors contributing to financial exclusion, both natural barriers such as rough terrains and man-made barriers such as high charges on financial services and limited access due to limited bank branches. The findings of the study were that agent banking is continuously improving and growing and as it grows, the level of financial inclusion is also growing proportionately. The study findings show that increasing the area covered by agents within the country has had the effects of increasing the reach of the financial services to the people thus raising the levels of financial inclusion because a certain cliche of the population would not visit the bank branches for various reasons included in the study. The findings in summary show that agent banking has the effect of increasing the level of financial inclusion in the country. The study therefore recommends that agency banking as a means of enhancing financial inclusion be highly supported and encouraged by all players- the banks, government, and licencing bodies especially local authorities; so as to reduce the high compliance costs in bureaucracy in registration. The study further recommends adoption of agency banking by all banks operating in the retail market.
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