10 Years Financial Services in East Africa

At the beginning of the 2000s, the financial sector in the region was evolving fast and mainstream institutions were beginning to consider changing their orientation to include previously excluded clients. Swisscontact understood that it was not only about inclusive products and services that were accessible and affordable but also about also about the capacity and capability of the workforce to deliver to these clients.

The beginnings of the financial services program in East Africa were in supporting the organisation development of SACCOs in kenya, Tanzania and Uganda including one Equity Building Society in 2001. 

Based on Swisscontact’s previous experience in Ecuador and on a study in 2003 looking at the development of a workforce geared towards serving this new clientele, the team – in partnership with AMFIU and the Makerere University Business School – developed the first microfinance postgraduate course in 2004. Since then microfinance students are graduating from 7 schools and universities across the region.

In 2005, Swisscontact undertook a diagnostic survey of the sector. Based on the results of that study and in the understanding that it takes different types of products and services offered by different types of financial institutions, the team put together the strategy that was to guide the project interventions over the next years. Swisscontact soon learned that partnerships are key to the process. Understanding the partners and the specific contexts in which they operate remains crucial to the success of Swisscontacts’ work.

During the last 10 years Swissconact experienced a global shift from microfinance to financial inclusion
 

• Diversification of Financial Services from credit to promoting savings, payment methods, new forms of credit such as leasing and hire purchase as well as insurance
• No one should be left behind and clients, not beneficiaries are at the centre of the action
• A wide range of formal institutions offer products and services
• Financial inclusion as part of the global development and Sustainable Development goals
• Technological innovation in the delivery of financial services (agency banking, mobile banking, internet banking)

Swisscontact's financial services programme in East Africa comprises of a number of innovative interventions designed to contribute to the overall achievement of the programme goals relating to impact, outreach, and sustainability.

The connecting element of these initiatives is the facilitation of financial services to support the acquisition of productive assets and other pre-requisites for income generating activities to the aspiring people at the bottom of the pyramid.  

Our interventions aim to:
 

• Facilitate savings and credit products tailored to the needs of the population
• Develop the capacity of providers to provide viable commercial services and ensure their long term survival
• Significantly improve the financial literacy of the population through consumer training
• Increase capacity in the micro finance market through the development and implementation of skills curricula with educational institutions
• Improve accessibility, affordability and acquisition of services by growing outreach through new distribution channels and harnessing new technology; and through pricing appropriate to the existing cash-flows of the population
• Provide demand driven inputs at the policy level for regulation of the microfinance markets

We believe in partnering with different kinds of financial services providers who cater for specific needs of their low income clients. Our implementing partners are regulated and licensed financial services providers on all levels of the financial industry in Kenya, Tanzania, Uganda and Rwanda. These include grass-root savings and lending groups (registered with the Ministry of Sports and Culture in their respective countries), savings and credit cooperatives (SACCOs), micro finance banks, and commercial banks. Swisscontact is also a member of the Association of Microfinance Institutions in Kenya and Uganda. For the development and implementation of financial services skills development we partner with educational institutions at university and vocational training level.

In order to assure sustainability, we focus on partnerships with commercially oriented providers. Partners are selected based on their economic feasibility, relevance for economic growth for the aspiring people at the bottom of the pyramid, existing and potential outreach to client beneficiaries and relevance with regards to gender and governance standards.

Of importance is that each partner organization demonstrates ownership of initiatives through commitment in personnel, time and financial resources. The basic principle in the use of resources, is the implementation of private sector approaches whereby public funds and donations have a triggering function among partners, and are ultimately replaced by private investments.