Microfinance sub-sector
Microfinance entails the provision of financial services to low income people and enterprises. This underscores the crucial role of microfinance in empowering the Underprivileged social constituencies, and particularly
women, to contribute more effectively to economic development and poverty reduction in Kenya. The Microfinance industry in Kenya has experienced major transformations over the past twenty years, growing from a fledgling
concern dominated by a few donor and church-based NGOs to a vibrant industry increasingly driven by commercial sustainability. Generally, the providers of microfinance services in Kenya can be clustered into three broad
categories, notably, formal, semi formal and informal institutions – with the level of formality defined by degree of regulation. Under the formal category are commercial banks and the Post Office Savings Bank. The semiformal
category includes SACCO and Microfinance institutions, while ASCAS and ROSCAs dominate the informal category.
 Savings and Credit Cooperative Societies (SACCOS)
SACCOs form part of the semi-formal category of financial services sector in Kenya which also comprises microfinance institutions, while ROSCAs dominate the informal category. Kenya has an estimated 4,900 active SACCOs (compared with 43 commercial banks) offering savings and credit services to
over 2.1 million Kenyans. SACCOs have an increasingly important rural outreach. This began to develop from 1997 when the banking sector had serious financial problems (and in some cases due to bank strategies favouring
branch rationalization) that forced the closure of many rural bank branches leaving many people without any financial services. SACCOs stepped in and opened their own branches in some of these same rural areas. According to the CBK Annual Report (2004 – 2005), there are now approximately 155 SACCOs in these rural areas.
Development Financial Institutions (DFIS)
The Development Finance Institutions (DFI’s) were set up by the Government soon after independence to help in employment creation and to indigenize businesses. The traditional mandates of these institutions have been to help
fill gaps in financing not catered for by private banks and other financial institutions and especially in the rural areas either because of Banking Act requirements, restrictions imposed by the Central Bank guidelines or because
of the perceived commercial risks involved. Examples include development and seasonal loans for agriculture, small industrial investments and small businesses. Currently Kenya has five DFIs namely
Agricultural Finance Cooperation
Industrial and Commercial Development Cooperation
Industrial Development Bank
Kenya Tea Development Cooperation
Kenya Industrial Estate
 Insurance Sub-sector
Insurance companies are financial intermediaries that collect regular relatively small payments called insurance premiums from many policy holders who actually suffer irregular losses against which they are insured e.g. death, accident, fire, theft etc
Roles of Insurance Company
i) Provide cover for most risks thus enabling business to undertake various ventures which could otherwise be impossible.
ii) Accumulate large sums of money from premiums and this acts as long-term sources of finance both to the policy holders and other parties such as company seeking shares and debentures to insurance companies.
iii) They provide technical services such as risk management service by identifying degree of risk associated with a given investment. This enables businesses to avoid high risk ventures and possible losses in capital.
iv) Insurance companies insure high risk ventures and this act as a debentures to investment in high risk areas which in turn reduces the incidences of failure of businesses.
v) They also provide underwriting facilitate for newly issued shares acting as a source of finances from the companies gone public.
vi) They encourage savings by providing a number of polices which creates an atmosphere of good saving habits.
vii) Some insurance companies provide education policies which ensure education to children in their later stages.
The Kenya Insurance market consists of 44 insurance companies comprising of seven (7) Long term, twenty (20) General and seventeen (17) Composite insurers. There are two reinsurance companies.
The Industry is supported by various insurance intermediaries which comprises of two hundred (200) insurance brokers, (21) medical insurance providers, and (2665) insurance agents. The other service providers in the
market comprise of (213) Loss Assessors, (30) insurance surveyors, (23) loss adjusters, (1) claims settlement agent and (8) risk managers.
Capital Markets Sub-sector
The Capital Markets Authority (CMA) was established in 1989 through an Act of Parliament to promote, regulate and facilitate the development of an orderly, fair and efficient Capital Markets in Kenya. The capital market is part
of the financial system that provides funds for long-term development. This is a market that brings together lenders (investors) of capital and borrowers
(companies that sell securities to the public) of capital.
The main objectives of the CMA are to:
1. Develop all aspects of the capital markets with particular emphasis on the removal of impediments to longer-term investments in productive activities.
2. Facilitate the existence of a nationwide system of stock market and brokerage services to enable wider participation of the public in stock
3. Create, maintain and regulate a market in which securities can be issued and traded in an orderly, fair, and efficient manner, through the implementation of a system in which the market participants regulate themselves to the maximum practicable extent
4. Protect investor interest
5. Operate a compensation fund to protect investors from financial loss arising from the failure of a licensed broker or dealer to meet his contractual obligations
6. Develop a framework to facilitate the use of electronic commerce for the development of capital markets in Kenya.

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