In Kenya, micro, small, and medium enterprises (MSMEs) are the heartbeat of our economy. They make up 98% of all businesses, employ nearly 80% of the workforce, and touch every community — from the boda boda rider in Kisumu to the fresh produce trader in Gikomba. Yet, despite their reach, MSMEs contribute only about 40% to GDP, revealing a gap between their potential and actual impact. Bridging this gap calls for more than passion and hard work; it demands financial capability, inclusion, and access to affordable finance.
Thus said, financial and business literacy are not just skills – they are economic enablers. When entrepreneurs learn to master money, they don’t just keep their businesses afloat — they build a stronger nation. Kenya recently joined the world in celebrating the Financial Literacy Week in October and here’s why financial literacy matters.
Why Financial Literacy Matters
Behind this gap lies a challenge many entrepreneurs face: limited financial knowledge and business management skills. Without the skills to budget, manage cash flow, keep records, or navigate credit, too many MSMEs remain stuck in survival mode.
- Only 22% are formalized, locking most out of lucrative supply chains and public procurement opportunities.
- Just 16% access formal credit, forcing many to rely on expensive informal lenders.
Financial literacy equips entrepreneurs to track income and expenses accurately, build predictable cash flows, and maintain records that make them visible — and credible — to banks and investors. It also empowers them to make informed investment decisions that fuel sustainable growth. When MSMEs understand money, they don’t just survive — they scale, formalize, and create jobs.
The Financial Inclusion Landscape in Kenya
Kenya’s progress in financial inclusion is remarkable. According to the 2024 FinAccess Household Survey, formal financial access rose to 84.8%, up from 83.7% in 2021, while financial exclusion declined to 9.9%. The gender gap in access has narrowed to just 1.6 percentage points, although young people aged 18–25 remain the most excluded, with 23.1% lacking access to financial services. Digital finance continues to drive inclusion — over 52% of adults use mobile money daily, making Kenya one of the world’s most digitized financial ecosystems.
Yet challenges remain. Savings have declined to 68.1%, debt stress has increased, and only 18% of Kenyans are considered financially healthy. For women and marginalized groups, barriers such as limited assets, social norms, and documentation gaps persist, highlighting the need for gender-sensitive and inclusive financial systems.
Equity Group Foundation: Turning Knowledge into Opportunity
One of the most impactful champions of financial literacy in Kenya is the Equity Group Foundation (EGF), through its Enterprise Development and Financial Inclusion (EDFI) pillar.
Over the years, through the Pillar, EGF has:
- Trained 2.49 million women and youth in financial literacy.
- Trained and mentored 658,459 MSMEs in entrepreneurship.
- Enabled access of KES 363 billion in credit.
- Catalyzed the creation of over 2.1 million jobs.
EGF’s approach is holistic — combining training, mentorship, digital literacy, and direct access to finance. Programs like Equity’s Young Africa Works–Kenya and Financial Knowledge for Africa (FiKA) together with Mastercard Foundation don’t just teach theory; they connect entrepreneurs to actual opportunities. More than half of trained MSMEs have gone on to access credit, translating knowledge into tangible business growth.
The Ripple Effect
The results are visible:
- Formalization & Bankability: More MSMEs are opening accounts, adopting mobile payments, and keeping records — making them eligible for loans and procurement deals.
- Resilience & Productivity: Entrepreneurs are better prepared to handle shocks like inflation or seasonal downturns.
- Ecosystem Growth: A pipeline of scalable SMEs is emerging, supported by incubators, digital platforms, and tailored financial products.
The impact of financial and business literacy extends beyond individuals. Communities benefit from job creation and increased local spending, while financial institutions gain new, reliable customers.
At a national level, broader inclusion deepens savings mobilization, strengthens capital markets, and improves monetary policy transmission. Ultimately, financial inclusion drives shared prosperity – ensuring that economic growth is both inclusive and sustainable.
As Dr. James Mwangi Equity Group MD & CEO often emphasizes, “inclusion is not philanthropy- it is smart economics”. When entrepreneurs gain the tools, access, and confidence to grow, they don’t just transform their businesses- they transform society and the country.
From Survival to Scale
Financial and business literacy are the bridge between informal trading and formal entrepreneurship. They turn borrowers into investors and small ventures into engines of prosperity. To unlock the full potential of Kenya’s MSME sector, financial literacy ought to be embedded in every enterprise development, banking, and policy initiative. Financial inclusion must go hand in hand with business literacy, gender-responsive programs, and innovations like digital credit, agent banking, and alternative-data lending.
As we mark Financial Inclusion Week, the message is clear:
Empowering entrepreneurs with financial knowledge is not just good for business — it’s good for the society and the nation.
If you’re an MSME owner, start your financial literacy journey today. Seek training, keep records, and embrace digital tools. If you’re a policymaker or lender, make financial education part of your support package. Together, we can turn Kenya’s millions of small businesses into a powerful engine for inclusive growth.