The Expansion of Mobile Banking for Self-Help Groups across Kenya

It seems that just about everyone in Kenya has an M-Pesa account that allows individuals to deposit, withdraw or transfer money to other users with their mobile phone. Everywhere I go in Kenya, more and more businesses are accepting this as a form of payment for services and products.

Through the collaboration of CARE, Equity and Orange, mobile banking will become more popular. This team made up of an international non-profit organization and two of the largest for-profit businesses in Kenya now allows CARE savings groups, known as Village Savings & Loan Associations (VSLAs), to use mobile phones to access full banking services, including the deposit of savings into interest earning group accounts (2.5% annually). This allows VSLAs in remote locations to access saving opportunities without visiting a physical banking branch. The partnership takes pride in its “security verification system” that requires three group members to provide PIN verifications for every transaction. Withdrawals and deposits are also available for these groups at any Equity or Orange agent across Kenya.

Equity will soon start offering loans using this mobile technology to these self-help groups who register as VSLAs. This is not surprising because many microfinance providers are allowing clients to pay their loans with their mobile phones and a few are starting to disburse loans through M-Pesa to clients.

In Kenya, there are over 450,000 individuals that have helped form or belong to a VSLA. These groups are trained by CARE for one year to educate the members on group-based savings and lending. The VSLAs that want to expand their access to formal finance by borrowing from Equity Bank undergo further training to expand upon their financial literacy.

Mobile based technology is making finance even more popular, and it seems that both non-profits and for-profits are taking advantage.