Beyond the Paycheck: How Formal Banking is Changing Lives at Ecodunia

At Ecodunia, our mission extends beyond crafting beautiful, ethically handmade bags; it is about empowering our artisans and transforming lives. One of the most significant steps we have taken recently is transitioning all our employees from relying on informal payment methods, primarily M-Pesa, to receiving their monthly salaries through formal bank accounts.

This shift is more than a change in payment method-it is a leap toward financial inclusion, security, and long-term empowerment for our team and their families.

The Previous Situation: Reliance on M-Pesa and Informal Financial Systems

Before this transition, Ecodunia’s employees primarily received their wages via M-Pesa, Kenya’s widely used mobile money platform. Launched in 2007 by Safaricom, M-Pesa revolutionized financial transactions in Kenya by allowing users to deposit, withdraw, transfer money, pay bills, and access micro loans-all through their mobile phones.

For many informal workers and small business owners, including our artisans, M-Pesa was a convenient and accessible tool to manage daily finances without needing a formal bank account. It enabled them to receive payments quickly and securely, even in areas with limited banking infrastructure.

However, while M-Pesa offered tremendous benefits over cash payments, it remained an informal financial system. Mobile wallets like M-Pesa do not provide the full range of services that come with formal banking. For example:

• No Interest on Savings: Money stored in M-Pesa wallets does not earn interest, limiting the growth of savings.
• Limited Credit Access: Although M-Pesa offers micro-loans through partnerships like M-Shwari, the credit limits and terms are often restrictive compared to formal bank loans.
• No Formal Financial History: Transactions on mobile money platforms do not always build a credit history recognized by banks, which can hinder access to larger loans or financial products.
• Security and Control: While safer than cash, mobile wallets can be vulnerable to fraud or loss if phones are lost or hacked. Additionally, users have limited control over their funds compared to bank accounts.

For Ecodunia artisans, these limitations meant that although they could receive and send money conveniently, their financial growth, security, and access to broader economic opportunities were constrained.

Why Formal Banking Matters

Formal banking provides a more comprehensive financial ecosystem that can support long-term economic empowerment. Having a bank account means:

• Secure Storage: Funds are protected by regulatory frameworks and insured by the government, reducing risks of theft or loss.
• Interest Earnings: Savings accounts offer interest, helping workers grow their wealth over time.
• Credit Building: Formal accounts create a verifiable financial history, enabling access to loans and credit facilities with better terms.
• Access to Diverse Financial Products: Bank customers can access insurance, investment products, and automated payments, which aid in financial planning and risk management.
• Financial Literacy and Inclusion: Banks often provide educational resources and tools to help customers manage their finances effectively.

For workers in the informal sector like those at Ecodunia, transitioning to formal employment and formal banking is a critical step toward financial inclusion-a key driver of poverty reduction and economic development.

Ecodunia’s Journey to Financial Inclusion

Recognizing these benefits, Ecodunia committed to supporting every employee in opening a formal bank account. This process involved:

• Partnering with local banks to facilitate account opening with minimal barriers.
• Providing financial literacy training to help employees understand how to use their accounts effectively.
• Ensuring monthly salaries are paid directly into these accounts, replacing cash or M-Pesa payments.

This transition was designed to enhance dignity and security for our artisans, giving them greater control over their finances and opening doors to new opportunities.

How can formal banking impact the overall community at Ecodunia

Formal banking can significantly impact the overall community at Ecodunia in several interconnected ways:

Financial Inclusion and Stability

By moving employees from informal cash payments to formal bank accounts, Ecodunia enables workers to securely receive, save, and manage their income. This reduces risks of theft or loss and provides a stable financial foundation for artisans and their families.

Access to Financial Services

Formal banking opens access to a range of financial products such as savings accounts, credit, insurance, and payment services. This access empowers employees to plan for emergencies, invest in education or health, and improve their economic resilience.

Economic Empowerment and Productivity

Formalized financial inclusion helps small businesses and informal workers grow by facilitating better capital allocation and credit access. This can increase productivity and income, contributing to poverty reduction and more equitable growth in the community.

Social and Environmental Responsibility

Financial institutions engaged in sustainable banking increasingly incorporate social and environmental considerations into their services. This alignment supports community development initiatives and promotes responsible business practices that benefit Ecodunia’s artisans and their environment.

Community Ripple Effects

When individual artisans gain financial stability and access, the positive effects extend to their families and wider community, improving education opportunities for children, household stability, and overall quality of life.

Read More: Slow Fashion vs. Sustainable Fashion: Why It Matters & How You Can Shop Smarter

Personal Stories: Artisans’ Perspectives

Lilian, one of our tailors, shared how having a bank account transformed her life: “Before, I used M-Pesa for my salary, but sometimes I worried about losing my phone or making mistakes. Now, with my bank account, I feel secure. I’ve started saving for my children’s school fees, and it feels like I’m building a better future.”

Similarly, Victor, our workshop manager, shared how having a formal bank account has empowered him to make better financial decisions, invest wisely, and access bank loans when needed. He said, 'With formal banking, I can plan my finances more effectively, save systematically, and take advantage of loan opportunities that help me support my family and improve my work environment. It’s a game changer for my financial security and future.

The General Need for Formal Banking in Kenya and Developing Countries

Kenya remains a global leader in financial inclusion, with formal financial access rising from 83.7% in 2021 to 84.8% in 2024. This progress has been largely driven by digital technology and mobile money platforms like M-Pesa, which have nearly closed the gender gap in formal financial access. 

The need for formal banking in Kenya and across developing countries goes beyond convenience. Formal banking provides a secure place to save, access to credit, and the ability to build a financial history. These tools are essential for individuals and families to manage risks, invest in education or business, and plan for the future. For artisans and workers at Ecodunia, having a formal bank account means not just receiving a paycheck, but gaining the financial foundation to thrive and build lasting security.

Fair Prices vs. Fair Wages: Why Both Matter

There’s an important distinction between paying fair prices for goods and ensuring fair wages for workers. Paying a fair price for a product helps ensure that producers and businesses can cover their costs and invest in quality and sustainability. However, this doesn’t automatically guarantee that workers receive fair compensation or enjoy decent working conditions.

Fair wages go beyond the minimum legal requirements. They include not only a living wage but also essential benefits like health insurance and retirement savings, which provide security and dignity to workers and their families. At Ecodunia, we are committed to both:

• We pay fair prices for locally sourced materials, supporting Kenyan suppliers and artisans.
• We ensure our employees receive fair wages, along with benefits that support their long-term well-being.

Ecodunia’s Commitment: Health Insurance and Retirement Benefits

At Ecodunia, fair wages are just the beginning. Every employee is covered by health insurance through the Social Health Authority (SHA), ensuring access to medical care and protection against unexpected health expenses. Studies show that health insurance is one of the most valued job benefits, often ranked even higher than higher wages by workers, as it provides peace of mind and supports productivity.

Additionally, all Ecodunia employees are enrolled in the National Social Security Fund (NSSF), Kenya’s statutory retirement scheme. This means our team is building a safety net for the future, with benefits that include retirement, survivor, and invalidity coverage. NSSF membership ensures that employees can look forward to greater financial security in their later years or in case of unforeseen circumstances.

The Ripple Effect: Community and Family Impact

The benefits of formal banking extend beyond individual employees. When artisans gain financial stability, their families and communities also benefit:

• Education: Regular savings and access to credit help pay school fees, ensuring children stay in school.
• Health: Financial security allows families to afford medical care when needed.
• Economic Growth: Increased financial activity stimulates local economies as artisans invest in goods and services.
• Social Stability: Reduced financial stress contributes to stronger family relationships and community cohesion.

Ecodunia’s Broader Commitment to Dignity and Opportunity

This banking initiative fits within Ecodunia’s larger mission to dignify blue-collar work and break cycles of generational poverty. By providing fair wages, safe working conditions, and now formal financial inclusion, we empower our artisans not just to survive, but to thrive.

Read More: Ecodunia’s Commitment to Sustainability: Ethical Fashion That Gives Back

Moving from M-Pesa to formal banking is more than a payroll change at Ecodunia-it is a transformative step that enhances financial security, opportunity, and dignity for our artisans. As we continue this journey, we invite conscious consumers and partners to support ethical brands that prioritize holistic empowerment and sustainable impact.

This blog highlights how formal banking is changing lives at Ecodunia, illustrating the power of financial inclusion to go beyond the paycheck and build stronger, more resilient communities.