Indigenous Financial Service Research in Kenya, Ghana, and Togo

MSC conducted qualitative research in Kenya, Ghana and Togo and found that Indigenous Financial Services (IFS), such as rotating savings and credit associations (ROSCAs), informal moneylenders and burial societies play a critical role in driving access to finance for micro and small enterprises (MSEs). Experts estimate that the indigenous financial sector, in terms of its outreach, is larger than the formal financial sector due to its easy accessibility. The indigenous mechanisms offer: 

• Convenient access.
• Fewer entry barriers.
• Lower transaction costs.
• Quicker turnaround time.
• Flexible collateral requirements.
• Easier end-user terms. 

However, participation in formal financial services also has gains, such as access to business development services, investment opportunities, and financial literacy programs. The evidence suggests that financial inclusion requires significant collaboration between all actors in the ecosystem.