The lack of access to national identification cards is preventing millions of young people from participating in the formal financial sector. A recent survey by the Kenya National Bureau of Statistics (KNBS), in collaboration with the Central Bank of Kenya (CBK) and the Financial Sector Deepening Trust (FSD) Kenya, reveals that 1.9 million youths aged between 18 and 25 are financially excluded due to delays in issuing national IDs. This critical document is essential for accessing a range of financial services, from opening bank accounts to securing loans and insurance.
Financial Exclusion Among Kenyan Youth
The 2024 FinAccess Household Survey highlights a significant barrier to economic empowerment for Kenya’s youth. Of the estimated 2.3 million people without IDs, a staggering 83.4 percent approximately 1.9 million are in the 18-25 age bracket. This group has the highest financial exclusion rate at 23.1 percent, up from 22.5 percent in 2021. The inability to provide identification prevents these young people from accessing essential financial products such as savings accounts, credit, and insurance, which are pivotal for building financial stability and resilience.
The survey reveals that this exclusion is not just a matter of inconvenience; it has profound implications for economic development. Without access to financial services, many young people cannot invest in education, start businesses, or save for future needs key factors that contribute to poverty and economic inequality. This is particularly pronounced in rural areas, where 45.6 percent of young people in this age group are excluded from financial services compared to 19.6 percent in urban areas. The lack of mobile phones and high poverty rates exacerbate this issue, making it even harder for rural youths to participate in the digital economy.
Government Efforts to Reduce ID Issuance Delays
The Kenyan government has recognized the urgency of this issue and has responded with measures to expedite the issuance of national IDs. In September, the State Department of Citizen Services rolled out live capture equipment in Huduma Centers and National Registration Bureau (NRB) offices across the country. These new tools include two additional printers aimed at reducing the waiting time for ID cards from 21 days to just 10 days. This move is a significant step towards addressing the bottleneck in the ID issuance process, which has been a major contributor to financial exclusion among the youth.
The survey also underscores the challenge faced by older adults in accessing financial services. It found that 12.4 percent of Kenyans aged above 55 in rural areas are financially excluded compared to just 1.5 percent in urban settings. The persistent issue of financial exclusion among older people highlights the need for continued efforts to bridge the digital divide and enhance access to financial services across all demographics.
The Impact of Delayed ID Issuance
The delays in issuing national IDs not only affect individual livelihoods but also hinder broader economic development. Financial inclusion is critical for achieving economic growth, reducing poverty, and improving livelihoods. When young people are excluded from financial systems, it limits their opportunities to build wealth, invest in assets, and contribute to the economy. For many, access to a formal bank account is a gateway to financial independence, enabling them to save, access credit, and participate in the formal labor market.
Moreover, the inability to access financial services limits the government’s ability to provide targeted financial interventions such as subsidies, grants, and low-interest loans to vulnerable populations. As the country prepares for significant economic milestones, such as the Paris 2024 Olympics and Vision 2030 development goals, it is imperative to address these barriers to financial inclusion.
Conclusion
The findings from the 2024 FinAccess Household Survey reveal that despite government efforts to reduce ID issuance delays, millions of young Kenyans remain excluded from the financial system due to a lack of identification. As the country moves forward, it is crucial for policymakers to prioritize the streamlining of ID issuance processes and invest in digital infrastructure that can connect the excluded populations to formal financial services. Only through inclusive financial policies and infrastructure can Kenya achieve a more equitable and prosperous future for all its citizens.
