Kenya Case Study - How Incentives Can Boost Pensions For Informal Sector Workers

Overview

This case study examines Kenya’s efforts to expand pension coverage among informal sector workers. Kenya was an early innovator with the Mbao Pension Plan, launched in 2009, which allowed informal workers to make small, flexible contributions through mobile money. Despite strong financial inclusion and supportive regulation, the scheme reached fewer than 100,000 members (around 0.5–0.75% of informal workers). A newer plan under the National Social Security Fund, the Haba Haba, has achieved similar results. To address these limitations, Kenya is developing the Kenya National Entrepreneurs Savings Trust (KNEST), which will link pension accounts to loans under the government’s Hustler Fund, directing a portion of small business lending into savings.

The case of Kenya highlights the limits of relying mainly on tax incentives and suggests that matching incentives, bundled insurance, and auto-enrolment pilots may be more effective in expanding pension coverage among informal workers. At the same time, it depicts the importance of looking for innovative approaches to overcome the challenges from ineffective schemes.