The effect of banking services on the business performance of bank agents in Kenya

Abstract

Agency banking is a relatively new banking concept introduced in Kenya in 2010 by the Central Bank of Kenya (CBK), the main objective being to increase financial services outreach and promote financial inclusion of the unbanked and under-banked population. The current study, based on agency theory, sought to assess the effect of banking services on the business performance of bank agents in Kenya from an entrepreneurial perspective. A quantitative research survey design was adopted for the study, and questionnaires were used for data collection. A sample of 384 respondents from three constituencies in Nairobi (Roysambu, Kasarani and Kamukunji) participated in the study. Both descriptive and inferential statistics were used to analyse data. Findings revealed that while there was growth in business turnover per month for agents after signing up for agency banking, this was only true for those with a turnover of above Kshs. 150,000. The study recommends that other entrepreneurs should consider being banks agents, while the existing ones should increase their capital to reap the most from agency banking.

Keywords:

• agency banking
• business performance
• Kenya
• financial inclusion

PUBLIC INTEREST STATEMENT

Ensuring every individual has access to financial services when they need to is an important goal by various stakeholder globally. This is the reason for the introduction of agents by many banks globally. Agents carry out the roles of banks in areas the banks themselves would probably have not. In Kenya, agency banking was introduced in 2010, and has contributed in diverse ways to the economic development of the country. The current study sought to understand the contribution of agency banking to the business of those who run it-the agents themselves. Findings show that those who invest more in agency banking (above Ksh. 100, 000) stand a chance of benefiting the more from this business.

Additional information

Funding

The authors received no direct funding for this research.

Notes on contributors

K. Gitonga Margaret

Margaret K. Gitonga graduated with a Master of Business Administration from Strathmore University Business School, where she undertook the current study supervised by the second author. She has over 20 years of banking experience at senior strategic management levels. Margaret is a Lead consultant and founder of AWIBA-Network (African Women in Business Advisors Network). She is also board member and chair of planning and governance committee at KEY Micro Finance Bank PLC, a public enterprise regulated by the Central bank of Kenya and FEWA SACCO (Federation of Women Association savings and credit society) regulated by the ministry of Co-operatives in Kenya among other private company boards.

N. Kiraka Ruth

Prof. Ruth N. Kiraka is a seasoned lecturer of entrepreneurship skills development, strategic management, research methodology, quality management, and other business-related areas. She teaches at Strathmore University Business School and is also the Dean School of Graduate Studies at Strathmore University. She has a wide experience teaching both undergraduate and graduate students, and supervising master’s and PhD students.