Unbanked Kenyans create billion-shilling credit system

Thousands of Kenyans living in informal settlements are borrowing and saving billions, rewriting who can access credit in a country where many remain unbanked.

The grassroots effort shows how low-income earners are building financial systems to serve their needs, offering loans and savings options where traditional banks have limited reach.

While the overall financial inclusion rate in Kenya is increasing, many Kenyans in slums remain unbanked.

Financial Sector Deepening Kenya reports financial inclusion rose slightly from 83.7 per cent in 2021 to 84.8 per cent in 2024, but this growth has plateaued.

Nearly seven million adults, especially women and low-income earners, still lack access to formal financial services. Slums, often marked by poor infrastructure and high poverty, remain key areas of financial exclusion.

The model challenges the notion that lending to people in informal settlements is too risky, even as economic hardship pushes many further from formal finance.

Shofco Sacco, a community cooperative under Shining Hope for Communities, has grown to Sh 1 billion in assets and disbursed more than Sh 800 million in loans within a decade, earning seven national awards during the 2025 Ushirika Day held on Friday, July 4.

Chairman Kennedy Odede believes Sacco’s growth shows grassroots communities can build disciplined financial systems that transform lives without relying on traditional banking.

“This moment is a powerful testament to the resilience and vision of our members and leadership team. Shofco Sacco was built from the ground up to serve the grassroots, the people often left behind by traditional financial systems,” noted Odede.

Lending to members in informal settlements carries risk, with many lacking stable incomes to guarantee loan repayments.

However, Shofco Sacco’s credit management systems, anchored in trust and technology, have enabled growth while meeting members’ needs, Odede explained.

“Credit management is at the heart of any successful Sacco. Being ranked number one in that area shows that our strategies anchored in trust and digital systems are working. We are banking the unbankable,” he observed.

General Manager Victor Owiti views the Sacco’s achievements as proof that community-based financial institutions can compete with larger cooperatives while focusing on the needs of low-income earners.

“Our members are the engine of everything we do. We have built systems that reflect their needs and aspirations. From improved risk controls to investing in member education and digital platforms, we are moving forward with discipline and purpose,” Owiti noted.

The Sacco’s national ranking among the top community-based cooperatives was achieved despite it being less than 10 years since its inception, Owiti added.