Nairobi, 24th October 2023 – The United Nations Development Programme (UNDP) in Kenya has released a new discussion paper today, revealing that Kenya's mobile and fixed broadband data access costs are among the highest in East Africa. On average, a data-only mobile broadband package costs $4.64 for 2GB of data, while a 5GB fixed broadband package costs $26.92, which is higher than in countries structurally similar in development to Kenya, including Ghana, Sri Lanka, Vietnam, and Bangladesh.  

The discussion paper titled "Addressing Inequality: Universal Access to Digital Financial Services for Equitable Growth" analyzes the transformative impact of DFS in Kenya and highlights the need for policies that prioritize universal access to digital infrastructure and DFS to ensure that the digital divide does not lead to further income inequality. 

Anthony Ngororano, UNDP Kenya's Resident Representative, stated that: "Universal access to DFS is critical to ensuring that no Kenyans are left behind in the digital economy. Achieving universal access requires a holistic approach, including policy and regulation to improve affordability, crowding in financing, investment in innovation, and education. It is also crucial to implement and enforce comprehensive data privacy and cyber-security frameworks to build trust in the usage of DFS.”  

The paper raises important questions about the impact of DFS on inequality. While digital financial products, including mobile money and digital credit, have had a transformative impact on payments and loans in sub-Saharan Africa (SSA), particularly in Kenya, disparities in access to and affordability of digital infrastructure are major sources of inequality in access to financial services. While mobile phone penetration rates are high in Kenya, low-income earners are less likely to own mobile phones or pay for the energy needed to operate them. Access to electricity is not universal, with 38% of the rural population unable to operate digital devices. In addition, data access costs are prohibitive for low-income families, with data-only mobile broadband packages costing 14% of monthly expenditure in rural areas. Only 22% of the population frequently uses the internet, and 87% of individuals in the lowest wealth quintile have never accessed it. 

“DFS has been instrumental in enabling access to finance in Kenya, particularly through mobile money, which has successfully increased the reach of financial services to excluded and under-served groups. However, while the impact of financial services on economic growth is positive, the distributive impact of access to financial services has received limited attention. This paper sheds light on how DFS can increase the income gap between those with and those without access, and how an undersupply of DFS is affecting the financial health of households,” added Ngororano.

The paper provides recommendations to promote universal access to DFS and reduce inequality, including lowering the costs of digital devices and data, promoting non-regressive pricing structures, improving digital literacy, and monitoring the evolution of DFS access. It also recommends implementing a comprehensive regulatory framework to ensure data privacy and protect consumers, limiting predatory lending practices, crowding in private finance, and reviewing taxation policies to promote financial inclusion and growth.

 Click here to download the discussion paper.

For media enquiries please contact:

UNDP Kenya

Martin Namasaka

Head of Communications, UNDP Kenya

Email: communication.ke@undp.org

Sheila Kimani

Communications Associate

Email: communication.ke@undp.org

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