One Step Beyond: Challenges and Opportunities in Promoting Quality Financial Services in Remoter Areas

Publication Date: Oct 2002
Published by: MicroSave
Document Type: Paper

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How can rural finance be improved in Kenya?

This paper attempts to describe and analyze models of financial provision in Kenya that are reaching remoter areas or have the potential to do so. It also presents the outline of an action research project to promote rural financial service provision.

The paper analyzes the following three models of provision:

• The managed ASCA model;
• Financial Services Associations (FSAs) model;
• Non-traditional SACCOs.

It presents the following analysis and discussion of the three models:

• Common feature - they have elements of user-ownership;
• Low-cost and flexible;
• Often poor management and governance - there is a need to provide low-cost support and supervision services.

The paper describes the outline of an action research project:

• Purpose - to improve the provision of quality demand-led financial services in rural areas;
• Specific objectives -
  • To research, analyze and document models of sustainable financial service provision that are reaching into rural areas;
  • To improve the quality of support and supervision services.

The paper concludes that:

• Community-based systems in West Africa have been able to improve outreach to rural areas;
• However, there is scope to develop their transparency and accountability;
• The proposed project would experiment with and develop improved systems of governance with a small number of action research partners, while developing a forum for the discussion of rural finance experience.