So what is financial inclusion?

This blog is part 1 of a 5 part series on what is financial inclusion and how is it informing the design of the curriculum for IDDS Kenya.

By Alois Mbutura, Hamid Mehmood, Julio Lavalle, Krista Nordin and Mansi Kakkar


As we lead up to IDDS Financial Inclusion in Embu, Kenya this July, we wanted to bring you as an insider throughout our journey to tackle financial inclusion challenges in rural Kenya. At the core of our curriculum we have been able to develop a design summit model that will include design for financial inclusion, behavioral economics and venture development components that not only aim to build capacity but also to promote the co creation of solutions with the potential to carry on after the summit.

But before diving into the details on how we will tackle those challenges, let's understand what we mean by financial inclusion.

In order to do this we'd like to share with you a series of 4 short stories in the next few days. These stories from the field have the objective to showcase how financial inclusion in Kenya is allowing people to save for family needs, borrow to support a business, or build a cushion against an emergency. Having access to some type of financial services is a critical step towards both achieving universal financial inclusion and reducing poverty & inequality.

  1. Bringing the bank to the kitchen

 Cooking in open fire vs. cooking with an improved cookstove.

Cooking in open fire vs. cooking with an improved cookstove.

This first story is about the Mwangis. A family of four living in the outskirts of Machakos, around 1.5h of Nairobi. There, Mercy and James have two kids Yvonne (8) and Evans (9) and make a living from subsistence agriculture, selling their crops locally and making up to US$ 5/day.

A day in Mercy's routine entails waking up at around 5am to get kids ready to go to school and prepare a simple breakfast. The Mwangis rely on charcoal for cooking. As a matter of fact, a total 65% of households in Kenya use primitive fuels as the main source of cooking fuel (animal and agricultural waste, mostly firewood) a number that goes to up to 90% in rural settings, followed by 29% of transitional fuels, mostly charcoal. Only 6% of households use advanced fuels for cooking like electricity or LPG.

Cooking on open fires require huge amounts of charcoal aside from the negative consequences on health, the environment and also their finances. Effectively, charcoal expenses for rural families could rise to up to US$ 300/year, a significant portion of their annual income.

But early last year Mercy heard from one colleague at her local chama (the Swahili word for local savings groups where members contribute an agreed amount of money as little as 50 shillings or US$ 0.50 for a period of time with the aim of helping each other grow economically) about the benefits of improved cook stoves.

Altogether, improved cook stoves have demonstrated to promote from 40 to 50% efficiency in the use of charcoal. Despite all the benefits, they are still expensive. For families living on up to $5/day, a $40 to $70 cook stove is a luxury. Therefore, access to financing is a key factor in enabling target groups to purchase modern cooking energy.

BURN Kenya, together with local MFIs and savings groups, is doing this with its main product Jikokoa which comes from two Swahili words Jiko (stove) and Okoa (save). So Jikokoa literally means “the stove that saves”. In this way, they avoid up-front investment and facilitate payments of ~$0.20 per day over a 12 month period. Given that daily fuel expenditures will be reduced from $1.15 to 0.80 per day per day the stove is expected to effectively increase household income from day one.

After a year of using the Jikokoa stove, the Mwangis not only have saved household money in buying charcoal that could be invested in buying seed for their small parcel of land but are also taking advantage of the superior, more efficient combustion process that significantly improves the air quality within the home, thus helping to reduce respiratory disorders especially of women and children.

Stay tuned for the next story from the field!

IDDS kenya 2018 will be held in Embu from July 8 to 23 with the aim to co create solutions to boost access to innovative financial products and services focused on rural populations. We encourage to follow our journey. We are also crowdfunding for selected participants with high potential that are unable to pay for their transportation and expenses during the summit. If you or anyone you know would like to contrtibute to the cause please click in in our StartSomeGood crowdfunding campaign