Institute for Money, Technology & Financial Inclusion

This paper examines the factors that make cash ‘sticky’ in the increasingly digitized Kenyan financial landscapes. On the one hand, it discusses the mismatch between assumptions implicit in the financial inclusion discourse and ideas of saving, accumulation and money enshrined in local financial practices, and provides an overview of the current digital payment situation in Kenya, in terms of strategies and data. On the other hand, it draws insights from industry efforts in which industry expectations are tested against a background shaped by the dominance of cash and traditional financial institutions. The overall goal is to further the understanding of potential drivers and challenges of ‘cash-lite’ approaches to financial inclusion, as well as the convergence and divergence of theory and evidence. This study uses qualitative methods of data collection to understand the social, cultural and economic drivers of payment behaviours, and the opportunities and constraints for adoption and acceptance of technology. It argues that the enduring reliance on cash suggests that a rational calculative approach is not adequate to understand people’s decision making when considering different options in a repertoire of financial alternatives. Most importantly, the materiality of cash affects its pragmatics within a broader repertoire of financial practices revolving around different means of payment and storages of value. It thus recommends that an approach to the design of epayment systems should not only be largely ‘open-source’ for ease of interoperability with other payment systems, but also localised, to converge with local contexts.