Digital Banking by Urban Refugees in Sub-saharan Africa: A Case of Kenya

Digital banking has become increasingly prevalent in Kenya in recent years. Kenya has experienced rapid growth in mobile phone ownership and usage, with over 90% of the population having access to mobile devices as of 2023. This high level of mobile penetration has created a favorable environment for the adoption of mobile-based financial services. The introduction of M-Pesa, a mobile money transfer and microfinancing service, in 2007 has been a significant driver of digital banking in Kenya. M-Pesa has become the dominant mobile money platform, with over 30 million active users as of 2022. This widespread adoption of mobile money has paved the way for further digital banking innovations. The Kenyan government and various financial institutions have prioritized financial inclusion as a key development goal. Initiatives such as the National Financial Inclusion Strategy have aimed to increase access to formal financial services, particularly in rural and underserved areas. Digital banking solutions have been instrumental in achieving these financial inclusion objectives. Refugees in Kenya face significant challenges in accessing digital banking platforms, despite the overall growth and adoption of digital banking in the country. Many refugees in Kenya lack official identification documents, such as national ID cards or passports, which are often required to open a bank account or register for digital banking services. This lack of formal identification creates barriers to accessing formal financial services. This study investigated the utilization of digital banking services by urban refugees in Kenya. The objective of the study was to determine the impact of CBO membership, SIM Card ownership, Refugee ID Cards, and other socioeconomic variables on digital mobile banking. The estimates were regressed using the logistic regression and marginal effects analysis conducted. The study found that access to SIM cards, Refugee cards, and mobile banking positively impacted the utilization of digital mobile banking services. The study also found that participation in community-based organizations positively impacts the utilization of digital banking. The study concludes with recommendations to the government of Kenya to put in place measures to ensure timely issuance of refugee cards to refugees to ease their access to SIM Cards for easier utilization of digital banking services.