CENTRAL BANK OF KENYA
Remarks by
PROF. NJUGUNA NDUNG’U
GOVERNOR
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UNEP Headquarters, Nairobi
Wednesday, 11th February 2015

Dr. Achim Steiner, Executive Director, UNEP;
Mr. Manuel Moses, Regional Head, IFC Africa;
Distinguished Participants;
Ladies and Gentlemen:
It is my pleasure to welcome you to this convening together with
my co-host, Dr Achim Steiner. My thanks go to Dr. Steiner and
Mr. Manuel Moses for putting together this forum. Our meeting
today follows yesterday’s convening with Chief Executive Officers
and leaders of regulatory agencies from the financial sector.
Ladies and Gentlemen: I was impressed at the level of enthusiasm
and ownership of sustainable finance by the CEOs at yesterday’s
convening. We should also be proud of the already budding
sustainable finance initiatives across the Kenyan financial sector
ranging from banking, insurance, capital markets, retirement
benefits and asset management. These initiatives will be shared
with you in the course of today. My key takeaway from
yesterday’s convening is that there is high level support at CEO
level for sustainable finance in the institutions represented here
today.
Ladies and Gentlemen: Wearing my dual hats as a central banker
and regulator, let me underscore that sustainability lies at the
heart of our decision making. As a central bank, we take the
view that we need to go beyond our traditional mandate of price

and financial stability. In emerging economies such as Kenya, it
is imperative that Central Banks also act as market development
agents. In this role, Central Banks support development of
financial infrastructure, strong institutions and a conducive
policy environment. It is this underlying philosophy that has
guided us in execution of our mandates that I will now turn to.
First, stability of domestic prices creates an environment of
certainty. The market formulates long term solutions based on
this certainty. When there is uncertainty, the market develops a
waiting option and slows down economic activity. A waiting
option is not sustainable.
Ladies and Gentlemen: Second, we can only talk about financial
sustainability when the financial markets are accessible.
Financial inclusion will lead to financial development and open
discussions about policies for financial sustainability.
Several initiatives in Kenya for financial inclusion include:
introduction of mobile phone financial services,
introduction of the Agency Banking Model and Currency
Centres to lower the cost of doing business for banks,
licensing of microfinance banks, which target lower-income
segments, and expanding institutional branch network
countrywide,
allowing banks to introduce Shariah compliant (or
participatory) banking products, and

the Credit Information Sharing mechanism to build
Information Capital to solve information asymmetry problems
in the financial sector. But also a mechanism that can develop
templates for ratings either for individuals or projects – where
sustainability can be an indicator.
The evidence so far indicates that these reforms and initiatives
have had an appreciable impact in expanding financial access.
According to Geospatial Surveys conducted in 2013, Kenya was
ranked ahead of peer countries, Tanzania, Uganda and Nigeria.
Most fundamentally, 76.7% of Kenyans live within 5 kilometres
of a financial services touch point compared to 47.3%, 42.7% and
35.1% for Nigeria, Uganda and Tanzania respectively.
Ladies and Gentlemen: Third, the CBK mandate of financial
stability where the overarching goal is to promote existence of
strong banks. Without strong banks, we cannot talk about long
term and sustainable finance. In this regard, CBK has adopted a
flexible risk management framework for the banking sector,
which can accommodate, among other areas, the management of
environmental and societal concerns.
Ladies and Gentlemen: Fourth, since 2009, the Kenya
Government through the CBK as its fiscal agent has issued 7
long-term infrastructure bonds. Proceeds have been used to fund
sustainable infrastructural solutions including clean and
renewable energy plants, like the geo-thermal power generation.

The deployment of these funds towards eco-friendly projects
serves as a benchmark for private sector institutions in their
project appraisal and implementation decisions.
Ladies and Gentlemen: It is not in doubt that there is a case for
sustainable finance in Kenya. Kenya has ambitious plans to
transition to a green economy. This comes with tremendous
financing opportunities for both domestic and foreign financiers.
For instance, the substantial financing required in scaling up
Kenya’s renewable energy output requires imaginative solutions.
The banking sector alone cannot meet these needs and other
emerging opportunities as Kenya goes green. We must therefore
seek solutions that straddle the banking, insurance, pension
funds and capital markets spheres.
As we design a roadmap this morning, we should take cognisance
of the enormous opportunities that sustainable finance offers.
Working in silos as is the case currently will not scale up
sustainable finance. We should therefore come up with a holistic
roadmap that incorporates the financial sector players,
regulators, development partners and the Government. Let us also
formulate clear deliverables, performance indicators and a
roadmap that will facilitate Kenya’s aspiration of being a green
economy.
With these remarks, Ladies and Gentlemen, I look forward to
fruitful deliberations.

Thank You.