Sunday, 17 September 2017

The price of convenience in our politics



As we await the Supreme Court full judgement that led to the nullification of the 2017 Presidential results, some of us are keen to see the findings that informed the decisions. The integrity of the electoral process matters just as the outcome.

Of interest are the developments we have gone through in the last five years. The country is politically vibrant and hence our economic performance is thus related to the same. Competition for political supremacy has largely defined our social fabric. 

My one desire is the day the country will go beyond the ethnic factor and agree to pursue interests with common benefit to all. Every single citizen is concerned of the rut we are in, poverty and mediocrity affects all of us. 

Our Political System

Whereas we gifted ourselves a constitution in August 2010 that seeks to create working systems that will serve all of us. We have taken an unpredictable path of politicizing everything. This is dangerous. From general observation the space for professionalism and objective criteria in Government has remained shallow.

With observation it baffles me how, when it’s convenient for us, we have taken to defending what is the opinion of our political leaders, even when the position may not be objective. A good observation is the remarks of our recently elected leadership and interested parties on furthering the position of their preferred side of politics as opposed to the right and objective position. Ours are politics of convenience. 

On reflection, I’m of the opinion that we have become people who are going to act on convenience. What is convenient becomes right. This does not create stability in our society.

If the law is for all of us, why are we failing to invest ourselves heavily in creating pre-determined laws (as the supreme law requires us to) so that we can then remain safe within the law as opposed to remaining safe in convenience?

The electoral disputes

As law required, political leadership in the country will be attained through competition in an electoral process with the majority carrying the day. The process to achieve that is now proving a liability to the country and we are handling it to our convenience.

The last seven years have seen us form an electoral body, gone through an election that has left us badly divided and conveniently dealt with the outcome from it. 

The two major political players are not helping the situation either. Their actions have not been for the interest of the nation but their own.

Whereas we for good intent did laws establishing the electoral body with independence, we in the years last two years went against the law and acted in convenience in dismantling it. 

We took a political process (for convenience) leaving the law intact in handling our dissatisfaction with the conduct of the electoral body. We had all the time since the elections in 2013 to deal with the electoral body on the account of its breaches, some which were proven. If we were objective we would have done it well for the interest of longevity starting with the 2017 elections.

We did set a wrong precedent that we can set the law aside and act in convenience. Kenya Shall we all say “Mea culpa, mea culpa, mea maxima culpa”  indicting our leaders, The President and the opposition leader failed to honestly follow the law in handling the disbanding of the IEBC. 

Our unfaithfulness to the general requirements of the law has opened up issues that should be disturbing to all those who are genuine patriots. We have been treated to secessionist talk. The judiciary has been thrown mud at for not agreeing with the executive and the majority in legislature may be used to smear more mud. Will we be looking at political or convenient processes to undermine other rights and institutions? These conveniences are costly. 

The two competing sides have different positions as to how we should conduct the elections. The incumbency favouring the status quo as the law requires on the conduct of elections while the opposition is looking at having a reformed referee before the repeat poll. What is the most convenient way of solving this impasse? 

The country awaits the repeat of the presidential elections. As a Kenyan looking at the economic outlook of the country we are fatigued and cannot afford to have a lot of time in anxiety. We need the elections as soon as now so that we can move on with our lives.

What lessons should we learn from the situation we are in? It does not matter how many times we reform the laws and regulations in the conduct of elections, what we perhaps need to review are our credibility parameters as a Country, Individually and collectively.

Kahugu Muiruri
September 17, 2017   




Monday, 7 August 2017

As We Vote


I have over a number of months been looking for materials documenting my country's history, political and economic. Few of present day persons I have spoken to give consistent account of the political struggle for independence. Some tend to align it with the modern day politics. Ours being a polarized nation, I hope to one day get objective information.

We are going into the sixth general election as a multiparty state, and a second one in a devolved system of Government. We are a nation seeking to determine ourselves through democratic processes.

In the beginning

A century ago the British having established our commercial viability declared Kenya a protectorate. An order that was ruthlessly enforced, land taken away from us and commercial exploitation on the same started under white settlers.

Kenyan communities were crushed and forced into restrictive lives . This led them to coalesce and resist the British rule in their own ways. Over time it led to rising dissent to force the British to listen to their issues. The main agenda was to get their lands back. The Maasai are said to have opted for legal means. Kalejins and Gema communities went for open violent resistance.

Negotiations for land return or representation of Kenyans in legislative establishment was hard to come by since only numbered Africans got the chance. The British did pass laws to legitimize their occupation of the country.

After years of struggle, torture, deaths and losses we finally got our independence. Our self rule started fifty plus years ago.

The same letter of the law that legitimized the land grab by the whites was used by the Kenyan elites in position and with means then to acquire and retain lands to themselves. How we dealt with question of land there after is debatable, it however remains emotive to date.

The national psyche

Various administrations have had to determine our politics and economic direction. We have over time coalesced as communities behind enigmatic figures who have galvanized us into tribes to the detriment of our nation socially and economically.

Our unity and engagement efforts are all tribal informed.

Our common problems despite our ethnic diversity are basic and similar. It's the economic challenge. Our potential is largely hindered by our tribalism and leadership.

The 2017 general elections campaigns have exposed several notable issues. There is a serious need for Civic education on our identity and aspirations as Kenya.

Our political competition has been shown to be pursued for personal economic gains. Despite our devolved system of Government, ethnicity is still a dominant factor. You either play the politics of trust and obey, and should you question your tribal leader, your aspirations are dimmed.

Brood of vipers

Collectively, our leadership integrity threshold is wanting. A baggage of known economic and even criminal offences are rendered void if one ascends into office through the ballot.

With the political class knowing the economic depression the majority populace are in, they have promised goodies to attract attention. We have dutifully flocked venues be it churches, open grounds, social halls to listen mostly to ethnic calculation, and aspirants pledge allegiances to “mtu wetu”.

To the politician, promised goodies will assure audience since poverty is common place.

Recent scandals like the NYS pilferage showed us the loot was shared among the two divides of the political formations. The Karen land grab benefited all in the political formations.

The sad reality is that even the leadership too stands on no ground. The brotherhood pledge by two top political antagonists on public forums changes into vitriol on campaign platforms. Who is the lesser evil?

Our national psyche for a better nation has been betrayed by the outgoing leaders from the two formations.

The unpopular choice

Despite our limitations, I think we have a national duty individually. A duty to maintain peace with our real freedom heroes by choosing the right direction as the current citizens and prepare right for the future.

Are we willing to vote ourselves leaders in office who are not afraid of creating and supporting a system of laws and not men? Who will take their responsibilities seriously by acting on good principles and policies to solve challenging questions of our time and nation?

Will we get ourselves leaders willing to embrace the openness of the day to listen and consult all the arrays of interest on matters of public interests?

Will we vote ourselves leaders  widely recognised for their work ethics, industry, integrity, excellence and even handedness?

We fought hard for pluralism, let's raise the bar on the same at the ballot.

God Bless Kenya.

Kahugu Muiruri

Sunday, 18 June 2017

SGR experience, observations and my take

June 6, 2017 my hassle was taking me to Mombasa. It was an opportunity for me to save a coin and take the promotional offer to ride on the SGR train. I was at the CBD Railways terminus for a free bus to connect to Syokimau, the Nairobi SGR terminus.
Getting to the terminus was a fairly smooth ride, however it did not escape me that Nairobi CBD inbound traffic had started at Mlolongo. If one is travelling with the morning train be on time otherwise you may miss it as you sit in traffic.

At the terminus getting a ticket is fairly easy. No form of identification was required. They should be able to identify us in a worst case. A lost ticket simply has no owner... The security check is similar to what is at some small airports. However they need invest in a carousel, I found my backpack on the floor among many others. I found the waiting lounge full. The boarding call was made and everyone seemed to be rushing to board. Passengers who had heavy luggage had to struggle with it. Luggage were not tagged.

The train left at 0900 hrs. In the coach the seats are comfortable…. A face me experience…. A group of men next to me are all full of entitlement how the Government has worked so well… one can tell which side of the politics they belong to.

1115 hrs we are at Mtito Andei. The Train from Mombasa arrived as well. The countryside is green thanks to the recent rains. We saw herds of elephants, zebras, antelopes and a lion. A game drive it was.

A small cup of tea goes for Sh. 100.

1350 hrs we arrive at the Mombasa Terminus. We find the free transfer bus has left and we had to wait for 45 minutes for it to be back.

The train cafeteria had a Chinese hostess. Among the ushers in the two terminals were Chinese nationals. At the Mombasa Terminus I saw on a display board that by 2027 only 10% of the human capital will be foreign. 2017 has a 40% foreign human capital component. Chinese must be slow teachers or we are slow learners...

Taxis are asking for Sh. 1200 there was no Uber or Little Cab available in the station at that moment. The terminus is largely empty, finishing construction work still ongoing. I never saw a shop where I'd buy water. I pray there will be enough business to keep these stations active during off peak hours. I noted a cartel like behaviour where the cab guys could probably be restricted from the terminus since i tried hailing one and on phone he said I have to meet him at the main road, he did not want to come to the terminus.

The access road to the station is under construction, it goes through an ancient estate that is evidence of neglect. As one approaches the Mombasa CBD the roadside is all littered with heaps of uncollected garbage whose stench was really a discomfort in the hot weather. What do the counties do?

SGR is a new right of way but is running parallel to the century old railway. Same as Nairobi, Emali, Voi and Mombasa, rusty wagons and train engines dot the old railway stations. It begs the question what will we do with the assets of the old railway? Do we have the same hands that run down the old rail doing the errands for SGR?

The Economics … and Politics

Transport both cargo and passengers is key to growth. We were told that we need the train to decongest our main highway, move cargo fast and efficiently, move passengers cheaply and safely.

To do the railway we borrowed USD 1.6 Billion @ 2% for a 20 year tenor with a grace period of 7 years. Further we borrowed USD 1.633 Billion @ 360 points plus LIBOR (total roughly 4%) for a 15 year tenor 5 of which are a grace period. The second loan attracts insurance at 6.93% that was payable as one installment. During the grace period Interests will be payable and the principal spread for the rest of the tenor. (I stand corrected, Government data is hard to collect lately)

The total amounts payable principal, interests and costs at the end of the 20th year will be USD 4.97 Billion. Breaking that into smaller numbers we need to raise USD 0.25 Billion net annually for 20 years. Assuming that the rail is a business concern, that it should meet its costs fully, we should have business giving us Sh. 69 million to pay the financiers. Adding the other running costs and a return to the citizens we are talking of business worth more than Sh. 100 Million a day.

With fares at Sh. 700 for second class and a capacity of 2500 passengers daily that will only generate Sh. 50 million a month. I noted very small numbers going into the premier classes. Even with the growth of the passenger numbers, it's notable that passenger business is just an add on…. Many are in advanced ages and have never travelled to coast. We travel on purpose and holiday is a luxury in the present economy.

Our port has reported handling sightly below a million containers. Assuming we have a half of that on the rail annually at the announced price. Sh. 50,000 will generate Sh. 25 Billion. What are the running costs…. These fares were and remain politically motivated.

The settlements along the railway line is in towns. I do make observations that the towns can grow into small industrial towns. Mazeras doing construction materials, Emali doing Horticulture value addition. We need more of business for this railway even as we borrow more to extend it to Western Kenya.

My experience of Mombasa is that it's hard to come across fresh cabbage or potatoes. I feel for the farmer in Ndaragwa, Nyandarua whose milk and cabbages never fetch him or her a better price owing to transport infrastructure challenges. I feel for the peasant herder whose roof is a plastic polythene along the SGR who is next to a fence to keep him off the rail line, does he identify with this pricey asset?

Madaraka in my little understanding is the right to self determine. Will this project determine our future economically as touted? Or was it a legacy for the political leadership of the day.

My listening to fellow passengers talking about the incomes from one passenger train trip is so much… I think a Million and Billion mean the same to some.

The ride was smooth, I saved time. The business case for the SGR is deep, and not for the minnows in economic thoughts.

Kahugu Muiruri
June 6, 2017

Saturday, 17 September 2016

The intricacies of Agriculture financing (Part 2)



The value chains should aim at creating an environment to allow production of adequate harvest to meet market needs. The value chain should deliver on protecting and growing the margins for the players. Security of the supply, support growth of the value chain and create safety and sustainability of the engagement. 

Cooperation between various players if worked well will bring in added benefits like enhancing reputation of the brand value chain, improve productivity, improve access to capital and access new markets for the produce. 

The Kenyan farmer is fragmented and made of small holder farmers and hence the task of bringing farmers together is one challenge for any value chain. Any value chain should be as an enabler to access to innovation, capital and having a trusted advisor. 

The Kenyan farmer has had a history of value hyped agriculture with no proper structures and control. Farmers have lost resources to con business persons. A recent one was one importing high yielding dairy cows from South Africa and milk being a trading commodity in high demand many farmers paid for dairy cows that were never delivered. 

Historically, farmers in many other areas have unpaid dues for their produce supplied to processors. From Pyrethrum, Sugarcane, Tea, Coffee among others. This has distorted markets and hence structuring agriculture into value chains has not been successful or has been met with skepticism.
Government interventions in bailing out failing processors of agricultural produce by injecting monies into them is welcome. But the common issue among all the processors is that they owe their suppliers, the farmers, substantial sums of funds of unpaid supplies. Production systems are aged and hence inefficient thus ending up with a high priced final product.  

The market for food produce has been flooded since the country has an open door policy to trading with other countries whose markets we also need to access. 

Notably the imported produce is retailing at competitive prices and hence that has opened another insight into our production cost. It’s clear that as a country we are not optimally using our resources in land, capital and agronomy. 

Borrowing form our earlier quoted cases and making an assumption that the entire of the land areas in the three countries is arable our efficiency in land use in agricultural production is below the two countries. India has an area of 3.287 Million Sq Km and a population of 1.4 Billion people translating to almost 0.5 acres per person. Israel has a land area of 20,970 Sq Km and a population of 10 Million translating to 0.5 acres per person. Kenya has an area of 581,309 Sq Km and an estimated population of 45 Million translating to 3.2 Acres per person. India and Israel have made huge strides in Agriculture both in mechanization and production compared to what Kenya achieves. They are food secure and exporting to the world whereas Kenya is not. 

Above 70% of the Kenyan population live in rural areas and as said earlier are engaged in one way or another in agricultural activities. Marketing of food produce is informal for the common food stuff and the high value food produce requiring value addition before going to the market.  

The situation is not bad though. The farmer despite the heavy investment in time, resources and energy the gain is not felt. The middle men in supply chain have been links to the market which have responded to the customer needs. 

An example is the raw milk market, most farmers will prefer to sell their milk to middle men who will supply it to the retailers as opposed to going through an organized farmer association as a marketer. Value addition and packaging will greatly increase the milk price but the infrastructure is lacking. 

How do we revive Agriculture?

The Kenyan farmer is still willing to make agriculture successful however there is need to address several factors affecting the farmer. 

The services adapted to the agriculture production cycle are in need of serious reforms. The supply of quality seeds and related inputs is still a challenge to the farmer. The government subsidizes the cost of fertilizer to the farmers but the supply chain of the same is not functional. Many are the reported media cases of Government fertilizer in the wrong hands. 

There is considerable investment in building dams to collect water that can be used for commercial agriculture in crop and livestock production. The next frontier is to have climate smart agriculture that is not weather reliant so as to create consistency. 

Ensuring that the devolved agriculture functions are felt on the ground. Extension officers to help build the farmers capacity through training and availing related services.
As an incentive to the farmers, the cost of inputs should be subsidize as well to reduce the production cost. 

Legal reforms and legislation needs to be in place to address any legal challenge the farmers or business desirous of engaging in any agriculture value addition business.

Agricultural credit should be looked at. An idea of a farmer’s bank and seeking partnerships will help. The objective being to avail well thought and structured agriculture credit. The current irrigation schemes the Government has engaged in are welcome to produce more food but the small holder farmer should also be facilitated to participate in food production for the country.

Another incentive is in commercialization of agricultural process to boost economic benefits. This will be in aiding the encouraging of value addition to secure more gains to the farmers. The process should be product and people empowerment centered.  

Kenya belongs to a community of nations. We thus have to keep watch of the happenings in the food and agriculture sector. Price volatility on agriculture related products will affect us. There are shifting market power and margins. The world and indeed Kenya population has a growing food need that has to be met. 

Agriculture cuts across boarders in matters trade, environment and development. Food demand and supply is a trade opportunity between countries, through this trade there will be diplomacy and social development and relations between nations. 

Other important agenda’s affected by agriculture is the nation’s population basic need in food and health eating. Agriculture is also a contributor to the energy and environmental sector.

As one of the speakers said, the policies affecting agriculture is an unfinished business, seizing the moment and making the promise of functional agriculture happen is the tough task ahead. We need leave the podiums and boardrooms and get to work.

Kahugu Muiruri
September 17, 2016        

The intricacies of Agriculture financing (Part 1)



I watched with interest as a high profile agriculture forum was happening in Nairobi earlier this month. Most of the speakers were eminent personalities who have worked their way to positions of leadership, business, policy think tanks and political leadership.

When I retreat the narrative that Agriculture is the backbone of our Economy is always present. Many are the developments that are happening in the sector and it is also getting competitive. 

Recent visits by high political leaders from India and Israel to Kenya should be food for thought for us. India is a populous nation 1.4 Billion people and almost 6 times bigger than Kenya my country. 

India’s agriculture is reported to contribute about 14% of the GDP and employs directly or indirectly 50% of the population. India is also an exporter of several agricultural produce. India has mechanized part of its agriculture and largely feeding itself. 

Israel is a fraction in land size compared to my country Kenya, is the largest producer of fresh produce and a leading exporter of agriculture technology.   

Kenya is food reliant, our production is mainly subsistence for food crops. Commercial agriculture and taking shape but is not competitive. One of the cited challenges by farmers is access to markets and capital to fund the farming operations. 

According to 2015 World Bank Data, Agriculture in Kenya is reported our agriculture contributes 31% of the GDP and has two thirds of the population directly or indirectly working in the sector, pointing to a need to innovatively look at the sector to grow it. 

The agriculture forum spoke of opportunities that exist. The production, the entrepreneurial, employment, social political stability, financing business among many others. All the proposals focused to the future. 

Agriculture is evolving. The growth of value addition ventures is on the rise. The growth of towns creating settlements is making new demands for food produce. Agribusiness is being touted as one way to address the high levels of unemployment. 

The Government and any Government has a role to play. The main roles are creating functioning agricultural markets, availing extension services, creating an information source and dissemination system, Legal framework and social protection. 

Israel presents a perfect example that it is possible to change the agriculture sector and profit from it with wise investments irrespective of the odds. India’s case is that despite the numbers proper use of land can provide more than enough. 

To Kenya the Agriculture potential is great. The concern is to seize the moment and make it happen. The undeniable facts are that food security and proper nutrition are issues that will be on our agenda for long. A large number of ailments is coming from unhealthy eating and in some parts of the country there are instances of insufficient food supply and stunted growth in younger population.

The country is spending monies on food imports and hence the need to upscale our production and make savings. There are business establishments focusing on agricultural produce value addition which is proving a viable business. It is thus worth saying that Agriculture is one of the ways to eradicate poverty and can be developed into enterprise. 

Current scenario

Agriculture like any other sector has been changing. Diversification into several crops or sectors is happening, there is an increasing investment being channeled into agribusiness. Farmer associations to market produce still exist despite the challenges though their operations are greatly reduced.

The key to change agriculture is in financing and empowerment through information to the stakeholders in farming. Agriculture as a business also requires right timing, optimal resource employment and management.

Value chains which are associations between farmers and several players involved in production of a particular produce. The essence of forming value chain is to create synergy in the production for the benefit of all the players.

Value chain structuring involves the creation of a support arrangement that facilitates production at the farm level with all players being beneficiaries in the production process. It starts with problem or potential identification, developing solutions for the identified problems and setting up a support arrangement for production. 

Activities will include sourcing for funding, input supply, farm production support, harvesting, value addition, storage and distribution to the market. Of key importance is to realize that just as any business all this comes with risks. 

One of the challenges faced by the sector is volatility of prices, poor agronomy, weather vagaries and yield risks. The mitigation of these risks will largely change production in any value chain.
Understanding the intricacies of agriculture financing, good agronomy practices and market dynamics are the realities that any value chain will have to address.

Most lenders are still developing agricultural based products and have in the past treated agriculture financing like the other products. To effectively handle the financing arrangements the price and cost of production needs to be considered. The cash flow cycle for the financed farmers should be matched with the repayments to reduce the risk of default. Lenders will also take credit life risk insurance and crop insurance to cover for any unforeseen losses. 

Price risk for the produce and yield risks are determinant of the success of a value chain.  Price risk is mostly beyond farmers because of the forces of demand and supply. Yield risk can be addressed by good agronomy practices, obtaining weather, yield or price index based crop insurance. Effective monitoring through the production time is also important in handling yield risk.

Companies involved in trading in agricultural produce are extending their reach to farmers by availing resources to equip farmers with the right capacity. For example companies involved in exporting fresh produce will have their field officers on the ground with contracted farmers to equip them on a continuous basis.

Kahugu Muiruri
September 15, 2016 …. See Part 2

Friday, 9 September 2016

Financial Access and inclusivity, at what cost?



Kenya has been said to have one of the fast progressing financial industry. We pride ourselves as home to a world changing innovation in mobile money an idea that is being studied worldwide and attempts being made to replicate its operations in many economies. 

Recently a world re-known figure the founder of a rapidly growing social and business website facebook Mr. Mark Zuckerberg was in the country to learn about mobile money. 

The mobile money innovation is touted as a way to achieving access to formal financial services to all mainly referred as financial inclusion. Politically inclusion can be said to be democratizing the movement of money. 

Central bank data 2013 indicates that regulated institutions in commercial banks and deposit taking microfinance banks had a total of 17.3 Million deposit accounts and almost 7 million loan accounts. The national population registration bureau indicated that it had issued almost 23 Million Identity cards as at June 2016. The largest mobile phone company reported to have 22 million subscribers as at March 2016.

Assuming that the national identity card is the basic requirement for opening a bank account and registering for a mobile phone number. The banks thus have a huge portion of population to reach out to that is unbanked. 

Financial inclusion comes in form of delivery of mainstream financial services to the target market. Inclusion comes as a package of the financial services targeted at increasing the market size and creating a business case for the market players. The need for financial services as an enabler to economic activities at convenience is vital to economic growth. 

Day to day economic engagements by the citizenry are aimed at creating a benefit for the individuals involved by increasing disposable incomes, accumulate assets and access other services conveniently.
Financial inclusion comes in packages that extend the services offered by financial institutions. 

The innovation is in the mode of delivery. The services packaged are payment services to allow money transfers and payments processing, saving services, credit services extending credit facilities to customers, Risk mitigation and wealth creation tools like insurance and pension packages and digital inclusion where platforms are availed to link services like accessing bank accounts through mobile banking. 

Financial inclusion is a means to an end. The rationale in engaging the service is the convenience and the benefit it offers. The innovation is in adapting the services to the conditions, preferences and context to the lower income market. 

In the Kenyan market, institutions that have engaged in furthering financial inclusion are having a notable social impact and are doing so for profit generation as they serve their customers. Telecoms, Financial institutions and enterprises engaged in solving common basic needs. 

The pricing for set up is high and thus the services extending inclusion comes at a cost. The convenience to which the service extends is the actual cost the consumer has to meet. A payment facilitated through a phone transaction will come at a cost that should otherwise have been incurred to do the conventional payment process. 

Financial institutions vary in their target market. Some have grown from target based institution like farmer cooperatives and building societies to becoming all-inclusive financial services providers.  Modes of deliveries to customers have moved to agencies and mobile phones. Good community banking has delivered inclusivity almost matching what is offered by corporate commercial banking.

Institutions competing for the same services have also partnered to create synergies as they seek to serve and retain their customers. For example a savings cooperative serving employees linked to a single employer say a teacher’s Sacco partnering with a commercial bank to issue Debit cards to the Sacco members to be used on the commercial banks network. Also a Sacco can issue payment instruments like bankers cheques drawn by the partner commercial bank.

The considerations for extending any service is on the innovation in product design and development, the delivery system to be adopted, the institutional business model in customer service all tooled together to reach a wider market.

Financial inclusion aims at trying to provide those with potential for economic growth with the financial tools they need to realize the benefits. It should address the paradox that exist where despite the financial sector deepening and reported economic growth there is a growing inequality. The nation is getting richer and GDP growing but the income gap between the rich and the poor is widening.

At a macro level having observed that the potential of economic growth that will come with financial sector deepening, the need to mainstream it in the law for consumer protection and creating a sustainable development strategy is beckoning.

Our passing of laws to allow agency banking, liberalizing the pension administration, acceptance of innovative products like mobile money have made ours an economy that is said to be financially progressive.

Successful examples are brands like the mobile phone service providers in kenya that have provided platforms for money transfers and credit services through the mobile phone card. The common brands are M-Pesa Orange Money, Equitel, Airtel Money among others.  Banks have adopted agency banking to conveniently reach their customers. KCB Mtaani, Co-op Kwa Jirani are now common in the local estates. Insurance companies are innovating to allow the channels available like Mbao Pension Plan. M-Kopa Solar that is allowing rural household access solar panel and accessories and pay for them over a period of time is also a form of service delivery to a section of the population that is disadvantaged.

From the common adopted definition, Financial inclusion is delivery of financial services at an affordable cost to the disadvantaged section of the economy. Institutions engaged in innovation to reach their customers do make heavy capital investments on top of running costs to have the services running efficiently.

They engage in the outreach for profit. Outreach comes with its own risks to be mitigated. Efficient delivery is what will largely determine the product acceptance in the market.
There is a business case for focusing on the inclusion services. Mobile phone service providers have reported growing profits from their services in financial inclusion. Agent banking also comes at a premium to the consumers. Mobile phone credit services have some of the highest premiums attached to them.

The products in the market have seen access of credit services available at the touch of a button via a mobile phone as long as one is of verifiable good credit history and has maintained regular money transfer service with the mobile service provider. Payments for utilities are easier to make through till numbers registered to the mobile money networks. Savings and bank transactions can are also accessible through mobile networks too.

With access convenience there are many jobs that have been created, transactions made safely and conveniently and savings mobilized. However the next frontier that needs attention is the financial literacy that the consumers have their responsibilities as well.

In the spirit of consumer protection there is need to explore ways of having the charges levied for the services looked at. The undeniable fact is that the convenience has come at a high cost.

Kahugu Muiruri

September 9, 2016