CENTRAL BANK OF KENYA
INAUGURAL ANNUAL LECTURE ON FINANCIAL
INCLUSION BY FINANCIAL SECTOR DEEPENING TRUST -
KENYA, 2015
Louis Leakey Auditorium, Nairobi National Museum, Tuesday, November 17, 2015
Dr. Patrick Njoroge
Governor, Central Bank of Kenya
As Prepared for Delivery
Mr. David Ferrand, Director – FSD Kenya;
Distinguished Participants;
Ladies and Gentlemen:
I am privileged to be with you this evening for this inaugural lecture on financial
inclusion convened by FSD Kenya. I would like to thank the organisers for the
recognition of the role that the Central Bank of Kenya plays in enhancing financial
inclusion in Kenya, and Dr. Tavneet Suri for the presentation on the evolution of
mobile money in Kenya. Let me also salute FSD Kenya for 10 outstanding years
of catalysing Kenya’s financial inclusion drive.
Indeed, the pertinent issues discussed at this forum, including the role of mobilephone technology in enhancing financial inclusion, are central to enhancing
economic, as well as, sustainable development in Kenya.
I note that the paper presented by Dr. Suri primarily focuses on the success of
M-PESA in Kenya. And we are indeed immensely proud of the successes of our
maiden money transfer solution. But beyond that partnerships between mobile
network operators and participants in the various sectors of the economy,
particularly in the financial services sector, have developed over the past 7 years.
These have contributed to the evolution of mobile money services from purely
money transfer platforms, to payment systems and currently the provision of
inclusive formal financial services such as credit, insurance and investment.

Ladies and Gentlemen:
Although mobile financial services have significantly contributed to financial
inclusion in Kenya, Dr. Suri’s paper still indicates that there are substantial gaps
between access and usage of formal financial services through mobile-driven
technologies. While adoption rates of mobile money services have greatly
increased (at 96 percent), a substantial portion of the households surveyed still rely
on informal savings mechanisms, such as mattresses – at 33 percent, with 37
percent in the rural areas and 28 percent in the urban areas. Despite the evolution
of mobile financial services, only 18 percent of the households were able to access
credit. The report indicates that, with the exclusion of commercial banks, of those
households that had access to credit, the major credit providers were M-Shwari –
22 percent, NGOs/Community Based Organizations – 22 percent, and
microfinance institutions – 17 percent. All these statistics indicate that informal
financial services still play a significant role in both rural and urban households,
particularly for households at the bottom of the pyramid.
It is therefore critical that the high access to mobile money services, is
complimented by similar usage levels, in order to exploit the full benefits that
mobile-phone related innovations present. I sincerely hope that discussions will
now transition to enhancing usage of mobile financial services rather than access.
To this end, encouraging interoperability and limiting agency exclusivity is critical
to foster the adoption of innovative digital financial services.
Ladies and Gentlemen:
As the Central Bank, our functions are mainly confined to two key areas – Policy
Development and Regulatory Oversight. The Central Bank has played, and will
continue to play, a proactive role in managing the risks posed by mobile financial
services, including the progressive development of legislation to regulate payment
system providers and operators.

We will also continue to encourage and initiate innovations to enhance financial
inclusivity. Looking forward there are two exciting mobile phone-based
innovations we are working towards:
Treasury Mobile Direct (TMD) – the TMD platform was successfully rolled
out on November 9, 2015. This initiative, which leverages on mobile-phone
technology, seeks to increase retail investors’ participation in the current
primary auction process for government securities. The services that will be
provided under the TMD project include information dissemination, account
status inquiry, bidding for Kenya Government Securities and payment/
settlement through mobile money platforms. Ultimately TMD will facilitate the
growth of government securities by increasing outreach to retail investors,
broadening the investor rate and increasing the national savings rate.
M-Akiba – This is a critical government initiative, which seeks to increase the
public’s participation in government securities for as little as Ksh.3,000 through
existing mobile phone money transfer services. The first M-Akiba infrastructure
bond, which seeks to mobilize Kh.5 billion will be launched shortly as
necessary arrangements are in the final stages. Retail investors will be able to
register, bid and pay for government securities through mobile platforms. This
will provide alternative investment options to retail investors who have long
been poorly remunerated especially for their deposits held by banks.
In closing let me underscore the Central Banks’ support to efforts geared towards
enhancing financial inclusion through digital financial services in Kenya.
THANK YOU