tl;dr: Kenya’s nonprofits widely use digital payments but lack integrated financial systems, limiting adaptability and transparency. Strategic, capacity-aligned fintech adoption can strengthen accountability, resilience, and donor confidence amid funding uncertainty.

#FinTechForGood, #NonprofitFinance, #DigitalAccountability, #SocialImpactKenya, #FinancialTransparency

1. Background

Social impact startups, social enterprises, and nonprofits in Kenya operate in environments marked by irregular funding, delayed disbursements, short-term grants, and shifting donor priorities.

Traditional budgeting and financial planning models often assume stable cash flows, which rarely reflect the realities of lean or early-stage organisations.

As a result, organizations face challenges in:

• Developing flexible budgets that adapt to funding uncertainty

• Maintaining financial visibility for accountability and donor confidence

• Making evidence-based financial decisions linking spending to impact

• Managing finances with limited capacity and fragmented manual systems

At the same time, Kenya’s fintech ecosystem is rapidly evolving, offering digital payments, budgeting, and financial management tools. Yet, adoption in the nonprofit sector is uneven, with gaps in integration, capacity, and policy alignment.

This insight brief will analyse how fintech tools shape budgeting, payments, and accountability for nonprofits in Kenya, identify gaps, and provide actionable recommendations for NGOs, donors, fintech innovators, and policymakers.

1. Introduction: Kenya’s FinTech Landscape at a Glance

Financial Technology (FinTech) broadly refers to the application of digital tools and platforms to enhance financial services, offering greater speed, efficiency, and transparency across economic activities. 

Kenya is widely recognised as a global leader in digital financial services (DFS), built on early mobile money innovation, a mature and diverse fintech ecosystem, and an enabling regulatory environment.

With a population of over 56 million and a strategic position in East Africa, the country has developed a digital finance system that serves both urban and rural communities at scale.

Nairobi, often referred to as the “Silicon Savannah,” is firmly established as one of Africa’s leading fintech hubs, alongside Nigeria, South Africa, and Egypt.

What sets Kenya apart is not just the number of fintech startups, but how deeply digital finance is embedded in everyday life.

Paying school fees, receiving salaries, sending donations, and managing community programs increasingly happens through digital channels.

Kenya’s payments ecosystem is among the most advanced on the continent. Anchored in early mobile money innovation and supported by a tech-savvy population, it continues to expand rapidly.

The digital payments market is projected to grow at over 14% annually through 2028, reaching an estimated value of more than US$14 billion.

This growth reflects both rising adoption and growing trust in digital financial systems.

1.1 Mobile Money Dominance

Mobile money remains the backbone of Kenya’s fintech ecosystem.

Since its launch in 2007, M-Pesa has fundamentally changed how money moves across the country.

Today, it serves tens of millions of active users and processes tens of millions of transactions daily, covering peer-to-peer transfers, merchant payments, savings, credit, and bill payments.

While other platforms such as Airtel Money and T-Kash operate in the market, M-Pesa’s scale, reliability, and nationwide agent network give it unmatched reach.

A majority of agents are located outside major cities, making mobile money the primary financial access point in many rural and underserved areas.

In practice, digital finance is often more accessible in remote communities than traditional banking. Beyond person-to-person transfers, mobile money now supports bulk payments, payroll, donor disbursements, and merchant collections — functions that are increasingly relevant for nonprofits, community organisations, and social enterprises.

1.2 A Diversifying FinTech Ecosystem

While payments dominate, Kenya’s fintech sector has expanded well beyond mobile money.

By 2024, the ecosystem included over 200 fintech startups and established players. Digital lending platforms are extending credit to individuals and small businesses that lack formal collateral, while savings and investment tools are digitising informal group savings models.

Insurtech solutions are also emerging, offering affordable micro-insurance products to farmers and low-income households.

Payment gateways such as PesaPal, DPO Group, and Cellulant enable organisations to accept multiple payment types — mobile money, cards, and bank transfers — through a single interface.

These tools are particularly important for NGOs and SMEs operating across different regions and donor reporting requirements.

1.3 Government Policies and Regulatory Support

Kenya’s fintech ecosystem is underpinned by a strong legal and regulatory foundation that balances innovation, financial stability, and consumer protection.

Core Laws and Regulations

• National Payment System Act, 2011 – Governs payment systems and service providers, including mobile money and payment gateways, under the oversight of the Central Bank of Kenya (CBK).

• Central Bank of Kenya Act (Cap. 491) – Mandates the CBK to regulate financial institutions and safeguard financial system stability.

• Data Protection Act, 2019 – Regulates the collection, use, and storage of personal and financial data across digital financial services.

• Computer Misuse and Cybercrimes Act, 2018 – Addresses cybersecurity risks affecting digital platforms and payment systems.

• Proceeds of Crime and Anti-Money Laundering Act (POCAMLA), 2009 – Sets AML and counter-terrorism financing obligations for digital financial service providers.

• Capital Markets Act (Cap. 485A) – Regulates fintech solutions offering investment, savings, and capital market services under the Capital Markets Authority (CMA).

Key Policies and Frameworks

Building on this legal base, Kenya has adopted several forward-looking policies and frameworks to encourage responsible fintech innovation.

• National Payments Strategy (2022–2025) – Guides the development of a safe, interoperable, and inclusive digital payments ecosystem.

• CBK Regulatory Sandbox Framework – Enables controlled testing of fintech innovations, including digital lending, insurance, and payment solutions.

• Digital Economy Blueprint, 2019 – Sets Kenya’s broader vision for digital infrastructure, connectivity, and digital skills development.

• CMA FinTech Regulatory Sandbox and Guidelines – Support innovation in digital investment and savings platforms while protecting consumers.

• Annual Finance Acts (including recent amendments) – Shape the tax treatment of mobile money and digital financial services, influencing affordability and uptake.

Together, these laws and policies have enabled Kenya to scale fintech solutions responsibly, creating a trusted environment for digital finance adoption across sectors.

2. FinTech in the Nonprofit Context: 

 2.1 Defining FinTech for Nonprofits and Social Impact Organisations

In the private sector, FinTech has transformed lending, payments, and wealth management; however, its meaning and utility differ substantially in public and nonprofit sectors.

For nonprofits, FinTech often serves as a bridge between limited administrative resources and increased regulatory oversight. 

Here, FinTech refers to the use of digital financial tools to enhance fiscal integrity, accountability, and mission delivery rather than profit maximisation.

Here, FinTech encompasses solutions such as automated grant disbursement platforms, blockchain based audit systems, AI-driven budgeting tools, and integrated donor management software.

These technologies aim not at profit maximization but at enhancing resource integrity, operational accountability, and service delivery outcomes.

Organizations can use smart contracts to manage restricted funding, mobile apps to provide microgrants, or predictive tools to anticipate revenue fluctuations from donor contributions.

Digital tools can also support restricted fund management, automate grant disbursements, provide real-time expenditure tracking, and anticipate revenue fluctuations arising from donor-dependent funding models.

The value of FinTech in this context is therefore measured not by user acquisition and monetization, but rather by indicators such as transparency, auditability, and process efficiency.

2.2 Context: NGO reliance on digital tools - Widespread but under-leveraged

For nonprofits, the emerging ‘digital-first’ environment fundamentally changes how they interact with the communities they serve.

Beneficiaries, field workers, and local partners increasingly expect to receive payments and support through digital channels rather than cash.

Digital finance has become part of everyday life, even in rural and low-income settings, enabling nonprofits to reach people more quickly, securely, and consistently. 

Internally, mobile money and bank transfers have also become the default for paying staff, volunteers, and community facilitators, settling vendor invoices, reimbursing transport costs, and delivering cash assistance in humanitarian programmes.

These tools offer clear advantages: they reduce the risks associated with handling cash, speed up disbursements, and create digital records that support accountability.

Yet this reliance is often limited to the transaction layer. Many organisations still manage approvals, budgeting, reconciliations, and reporting through spreadsheets, email threads, and paper-based processes. 

As a result, digital payments operate in isolation from the rest of the financial workflow and organisations continue to face persistent challenges in:

• Developing flexible, adaptive budgets that respond to funding volatility

• Maintaining real-time financial visibility for accountability and donor confidence

• Linking expenditure to programmatic outcomes and impact

• Managing finances with lean teams and limited technical capacity

2.3 Legacy systems and infrastructure constraints

Many nonprofits still rely on outdated financial systems that cannot support modern digital tools.

These systems are siloed, inflexible, costly to customise, and incompatible with cloud-based or Application Programming Interface (API)-driven platforms.

The table below provides a comparative overview of legacy financial systems versus FinTech-enabled platforms across key performance indicators such as efficiency, transparency, scalability, and compliance readiness

Legacy Financial Systems vs. FinTech-Driven Platforms

The sector seems to benefit from the speed and convenience of digital transactions but misses out on the deeper gains that come from integration — such as real-time visibility, automated reporting, and data-driven decision-making. These gaps directly undermine transparency, efficiency, and donor confidence.

2.4 Shift toward digital accountability and transparency

Across Kenya’s nonprofit ecosystem, organisations are increasingly operating under conditions of funding uncertainty, delayed disbursements, short-term grants, and shifting donor priorities. 

Donors want clearer, more timely financial reporting; regulators are tightening oversight; and communities increasingly expect visibility into how resources are allocated.

As accountability expectations rise and funding environments become more volatile, Fintech is accelerating this shift by making real-time financial traceability possible.

Every digital transaction leaves an auditable trail, reducing opportunities for fraud or leakage and strengthening financial integrity.

Cloud-based financial tools are also transforming how organisations manage compliance.

Automated reporting features can generate grant expenditure summaries, audit-ready documentation, and budget-versus-actuals analyses with far greater accuracy and speed than manual systems allow.

Digital receipts, dashboards, and integrated ledgers help nonprofits demonstrate responsible stewardship of funds — a critical factor in maintaining trust and securing long-term support.

In this context, fintech is not simply a tool for efficiency; it is becoming a cornerstone of organisational credibility.

The ability to show, in real time, how funds flow from donor to beneficiary is increasingly seen as essential to effective and ethical nonprofit practice.

3. Current Use of Digital Budgeting and Payment Tools

Across Kenya’s nonprofit and social impact sector, digital payments are widely used, while budgeting and financial management systems remain less consistently digitised.

Most organisations operate with a hybrid approach, combining mobile money, bank platforms, spreadsheets, and accounting software to manage day-to-day finances.

3.1 Payment and Disbursement Tools

Mobile money platforms, particularly M-Pesa, form the backbone of nonprofit payment operations in Kenya.

Organisations use these tools for routine and programmatic transactions, including:

• Paying staff stipends, consultants, and community facilitators

• Disbursing allowances and activity-related payments

• Receiving donations, grants, and community contributions

Larger or more established organisations often complement mobile money with bank transfers, online banking platforms, and payment gateways such as PesaPal, DPO Group, or Flutterwave.

These tools enable organisations to accept multiple payment methods, including cards and international transfers, through a single interface.

However, in most cases, these systems are used primarily to execute transactions rather than as part of an integrated financial management workflow.

3.2 Budgeting and Financial Management Systems

Tools for budgeting, fund tracking, and financial reporting are essential for accountability and donor compliance, yet they are less widely adopted than payment tools.

Many nonprofits continue to rely on:

• Spreadsheets for budgeting and forecasting

• Standalone accounting software with limited analytics

• Manual reconciliation between bank statements, mobile money, and budgets

Only a smaller subset of organisations use integrated systems that combine budgeting, payments, donor tracking, and reporting.

As a result, budgeting is often retrospective rather than adaptive, limiting the ability to respond quickly to funding changes or shifting program priorities.

A growing number of cloud-based accounting and nonprofit-specific platforms—such as AlgoMine NGO Management, Sage, QuickBooks, Xero, and Aplos—are being adopted, particularly by organisations with more complex donor reporting requirements.

3.3 Practical Use Cases and Emerging Trends

Despite varying levels of digitisation, several practical use cases and emerging trends are shaping how nonprofits apply digital finance tools in Kenya.

Bulk and Automated Payments
Bulk payments are increasingly used to streamline stipends, allowances, and cash-based assistance.

Humanitarian and development organisations distributing cash transfers have piloted API-based integrations with mobile money providers to automate disbursements and track transaction outcomes centrally.

For example, the Kenya Red Cross has tested API-enabled mobile money payouts that allow multiple beneficiaries to be paid simultaneously, with transaction status updates improving oversight and reducing manual follow-up.

At an operational level, bulk payment tools used in Kenya allow organisations to upload beneficiary lists and execute high-volume mobile money payments in a single process, significantly reducing administrative time compared to individual transfers.

Mobile-First Financial Operations

Kenya’s fintech ecosystem is inherently mobile-first, and nonprofit financial workflows reflect this reality.

Many organisations manage approvals, payments, and basic reconciliations through mobile-enabled platforms, particularly for field-based programmes operating in rural or underserved areas.

Mobile money has enabled digital operations in contexts where traditional banking access is limited, supporting faster execution and reduced reliance on cash.

Grant and Project-Based Payment Tracking

Some payment platforms now embed basic project and campaign tracking features directly into payment workflows.

Tools such as ClickPesa allow organisations to assign structured references to specific campaigns or activities, making it easier to distinguish donor funds by programme without opening multiple accounts.

While not full grant management systems, these features improve visibility and simplify reporting.

API and Platform Integration

There is growing interest in integrating mobile money, banking platforms, and accounting systems through APIs.

Kenya’s mobile money ecosystem—particularly M-Pesa’s open API framework—has demonstrated how transaction data and payment flows can be connected across platforms.

Although many nonprofits remain at early stages of adoption, integration is increasingly viewed as a pathway toward real-time financial visibility and reduced manual reconciliation.

Toward Strategic Financial Visibility

A gradual shift is also emerging in how nonprofit finance teams approach their role.

Digital tools are beginning to support forecasting, scenario planning, and program-level financial analysis, rather than focusing solely on transaction processing.

Centralised dashboards that aggregate mobile money and bank transactions, originally developed for enterprises, are increasingly relevant for nonprofits seeking clearer links between spending, budgets, and program outcomes.

4. Key Challenges, Risks, and Capacity Gaps

4.1 Infrastructure Constraints and Legacy Systems

A major barrier to effective fintech adoption in the nonprofit sector is the continued reliance on legacy financial systems.

Many organisations operate on outdated accounting or enterprise systems characterised by siloed data, manual reconciliation processes, and limited interoperability with modern digital tools.

These systems are poorly suited to real-time reporting, adaptive budgeting, or integration with mobile money and donor platforms.

The cost and complexity of replacing legacy systems often deter organisations from modernisation, particularly where procurement rules, donor requirements, or internal policies favour existing tools.

In practice, this locks organisations into labour-intensive processes that increase error rates, delay reporting, and limit financial visibility.

4.2 Emerging Compliance Pressures and the Shift Toward Digital Accountability

Nonprofits in Kenya face growing compliance and transparency demands from regulators, donors, and the public.

Reporting requirements increasingly call for transaction-level documentation, audit-ready financial records, and timely disclosures that traditional, manual systems struggle to support.

Donors are also seeking greater visibility into how funds are used, with a stronger emphasis on linking expenditure to programmatic outcomes.

This reflects a broader shift toward trust-based and results-oriented funding models, where responsiveness and transparency are central to sustaining long-term support.

Without integrated digital systems, meeting these expectations places a heavy administrative burden on already lean teams.

At the same time, digital accountability expectations are rising more broadly.

Open data initiatives, digital audits, and participatory approaches to budgeting and oversight are reinforcing the need for financial systems that provide real-time, standardised, and verifiable data.

4.3 Cybersecurity and Data Protection Risks

As financial processes become more digitised, nonprofits are increasingly exposed to cybersecurity and data privacy risks.

Many organisations manage sensitive financial, donor, and beneficiary data but lack robust security architecture, including encryption, role-based access controls, and multi-factor authentication.

Smaller organisations are particularly vulnerable due to limited IT budgets and expertise.

Weak security safeguards heighten the risk of fraud, data breaches, and reputational damage, potentially leading to loss of donor confidence or funding withdrawal.

Ensuring compliance with data protection laws further complicates adoption, especially where cloud-based systems are involved.

4.4 Regulatory and Policy Misalignment

Although Kenya’s fintech environment is broadly supportive, policy and regulatory frameworks have not always kept pace with the realities of nonprofit financial management.

Ambiguity around digital records, cloud storage, and emerging technologies such as blockchain can create uncertainty and delay adoption.

In addition, some donor and funding policies restrict the use of grant funds for core technology investments or impose rigid reporting formats incompatible with modern digital systems.

This misalignment forces organisations to maintain parallel systems, increasing administrative overhead and undermining efficiency gains.

4.5 Workforce Capacity and Digital Literacy Gaps

Effective fintech adoption depends on human capacity as much as technology. Many nonprofits operate with small finance teams that are overstretched and lack specialised skills in digital finance, data analytics, or cybersecurity. Resistance to change, limited training opportunities, and reliance on external vendors further constrain effective use of digital tools.

Without deliberate investment in capacity building and change management, fintech systems risk being underutilised or abandoned, reinforcing dependence on manual processes rather than transforming financial governance.

5. Key Takeaways and Practical Recommendations

This Insight Brief illustrated how financial technology (FinTech) can help nonprofits and public institutions manage money more transparently, efficiently, and responsibly. Tools like digital audit trails, automated budgeting systems, and real-time financial dashboards make it easier to track funds, reduce errors, and make better decisions using data.

FinTech is not just about moving from paper to digital systems. It represents a shift toward more accountable and responsive financial management, where organizations can clearly show how money is used and what impact it creates.

One key lesson is that FinTech tools only work well when they fit an organization’s reality. Systems must match funding rules, reporting requirements, and the size and capacity of the organization. Success also depends on basic readiness, such as having reliable internet, simple digital infrastructure, trained staff, and leadership that supports change.

FinTech can reduce delays, prevent misuse of funds, and build trust with donors and communities. However, these benefits do not happen automatically. Organizations need clear plans, gradual rollout, and regular oversight.

At the same time, digital tools bring new risks. These include data breaches, privacy concerns, and unfair decisions made by automated systems. For this reason, digital financial systems must be used responsibly, with strong data protection practices and respect for the people they serve.

Overall, adopting FinTech is not just a technical upgrade. For mission-driven organizations, it is a strategic step toward stronger accountability, resilience, and impact.

5.1 Practical Recommendations for NGOs and Donors

For nonprofit leaders and program managers, FinTech should support the organization’s mission, not add complexity. Useful starting points include simple budgeting tools, real-time expense tracking, and dashboards that show how funds are used across programs.

Staff should be trained to understand and use financial data confidently.

Organizations must also protect sensitive data and ensure digital tools do not harm or exclude beneficiaries.

For donors and development partners, support should go beyond funding. Providing technical assistance, supporting shared digital platforms, and promoting affordable or open-source tools can help smaller NGOs adopt FinTech.

Donors should also align reporting requirements with digital systems to reduce repetitive paperwork and improve consistency.

Across all groups, working together is critical. Sharing tools, learning from each other, and aligning policies can lower costs and make digital systems more effective. When financial transparency is treated as a shared responsibility, FinTech can strengthen trust and improve service delivery.

5.2 Looking Ahead: What to Explore Next

Future efforts should focus on designing FinTech tools that work in low-resource and unstable environments, such as rural areas or emergency settings. Systems should be flexible enough to adapt to different rules, cultures, and infrastructure conditions.

More attention is also needed on the ethical use of automated financial tools. As AI systems begin to influence budgeting and funding decisions, organizations must ensure these tools are fair, explainable, and do not disadvantage vulnerable groups.

Long-term learning is important. Organizations should track how digital tools affect their stability, governance, and relationships with donors and communities over time. Understanding what works after the initial rollout will help others adopt FinTech responsibly.

Finally, future innovation should focus on simple, affordable, and flexible systems. Tools should work well on mobile phones and be usable even when internet access is limited. This approach will help ensure that digital finance supports inclusion rather than widening existing gaps.

In the end, FinTech offers an opportunity not just to manage money better, but to build stronger, more trustworthy organizations that deliver real impact at the community level.

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🔗Connect with the author, Kandire Gonda🔗