On Thursday, the United Nations International Fund for Agricultural Development (IFAD) and the European Union inaugurated two new programmes in Kenya to improve rural development by enabling digital remittance flow faster and cheaper.
IFAD has awarded two funds to Credit Bank and Financial Sector Deepening Kenya (FSD Kenya), two financial institutions working in Kenya’s remittance ecosystem, as part of the EU-funded PRIME Africa programme.
The funding initiatives, according to an IFAD statement published in Nairobi, Kenya’s capital, aim to empower rural people and encourage economic growth, while complementing an ongoing regional project carried out in conjunction with MFS Africa, a digital payment service provider.
“Digital technologies are driving transformative change and opening avenues towards economic growth and efficiency, but they do not automatically benefit all similarly. As Team Europe in Kenya, we want to offer the means to create a digital future where technology truly serves the people,” said Henriette Geiger, EU ambassador to Kenya.
The alliance will work closely with Savings and Credit Cooperative Organisations (SACCOs) to reduce transaction costs and promote financial inclusion in rural regions.
This action is a great example of leveraging partnerships between SACCOs, fintech, and banks to deliver better financial inclusion and cheaper remittances in line with our SDG commitments’, Geiger added.
According to current Central Bank data, Kenya is the third-largest beneficiary of remittances in Sub-Saharan Africa.
For households, remittances provide a reliable source of income and a tool for resilience.
International remittances to Kenya hit a record-breaking 4.02 billion dollars in 2022, accounting for 3% of the country’s GDP.
According to Pedro de Vasconcelos, Manager of the Financing Facility for Remittances at IFAD, they are dedicated to promoting remittance transfers that are quicker, safer, and less expensive.
“Digital remittances are key to fostering financial inclusion while they pave the way for migrants and diasporas to fully contribute to the sustainable development in their countries of origin,” Vasconcelos said.
FSD Kenya will conduct an in-depth study in partnership with SASRA to assess SACCOs’ capacity to serve remittance consumers in rural Kenya.
The results of this study will be essential in determining creative methods that SACCOs might use in conjunction with their financial partners, such as banks and fintech firms, to enable wider access to digital remittances for rural SACCO members.
