MICROCAPITAL BRIEF: Credit Bank, FSD Kenya Engaging SACCOs in Effort to Reduce Remittance Costs for Rural Kenyans

The UN’s International Fund for Agricultural Development (IFAD) recently announced a pair of programs that will operate in Kenya under the EU’s Platform for Remittances, Investments and Migrants’ Entrepreneurship in Africa (PRIME Africa). In particular, IFAD will fund efforts of Kenya’s Credit Bank Limited and the nonprofit Financial Sector Deepening (FSD) Kenya that are aimed at “reducing transaction costs [and] promoting financial inclusion in rural areas.”

Credit Bank will engage savings and credit cooperative organizations (SACCOs) to serve as sub-agents to facilitate access to remittances from abroad. The bank also will develop a financial literacy curriculum for rural customers regarding remittances, budgeting, payments and savings.

FSD Kenya will partner with the SACCO Societies Regulatory Authority (SASRA) “to evaluate the capabilities of SACCOs in catering to remittance users in rural Kenya,” with the goal of informing policy making and “identifying innovative models” to enable SACCOs – and their bank and financial technology (fintech) partners – to foster greater access to digital remittances for SACCO members.

PRIME Africa was launched in 2019 and has a budget of EUR 15 million (USD 16 million). It is scheduled to end in 2024. The program serves the Gambia, Ghana, Kenya, Morocco, Senegal, South Africa and Uganda.

Credit Bank is a commercial bank that focuses on small and medium-sized enterprises (SMEs). It was founded in 1986 and has total assets of KES 26 billion (USD 186 million), customer deposits of KES 20 billion (USD 143 million), and loans and advances to customers of KES 15 billion (107 million) per its 2021 annual report.

FSD Kenya seeks to increase access to financial services for under-represented segments such as women, youth, and micro- and small enterprises by working “closely with the public sector, the financial services industry, and other partners to develop financial solutions” such as digital and “green” loans. Per its 2022 annual report, FSD Kenya’s one-year programme expenditures total KES 796 million (USD 5 million). The NGO is funded by the governments of Kenya, Sweden and the UK as well as the Bill and Melinda Gates Foundation. It is a member of the FSD Network, “a family of Financial Sector Deepening programmes seeking to build diverse and inclusive financial systems across Africa.”

Established in 1977, IFAD is governed by its 177 member nations with the goal of eradicating rural poverty in low- and middle-income countries. With a focus on agriculture and food supplies, the organization provides grants and loans to research organizations, governments, private firms and civil society organizations. As of June 2022, IFAD had an investment portfolio valued at USD 1.8 billion.

By Elva Montelongo, Research Associate

Sources and Additional Sources

IFAD project summary
https://www.ifad.org/en/web/latest/-/new-ifad-initiative-with-eu-funding-to-boost-rural-development-in-kenya-through-digital-remittances

IFAD annual reports
https://www.ifad.org/en/web/knowledge/annual-reports

IFAD homepage
https://www.ifad.org/

EU homepage
https://european-union.europa.eu/

PRIME Africa brochure
https://gfrid.org/publications/prime-africa-brochure/

Credit Bank homepage
https://creditbank.co.ke/

Credit Bank Investor Relations and Financials page
https://creditbank.co.ke/investor

FSD Kenya homepage
https://www.fsdkenya.org/

FSD Kenya annual report
https://www.fsdkenya.org/category/annual-reports/

Previous MicroCapital story on IFAD
https://www.microcapital.org/microcapital-brief-afdb-ifad-launch-m1-200-to-support-agricultural-smes-in-africa/

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