CENTRAL BANK OF KENYA
Remarks by
PROF. NJUGUNA NDUNG’U
GOVERNOR
CENTRAL BANK OF KENYA
at the
OFFICIAL OPENING OF THE WORKSHOP ON AGENT BANKING
Kenya School of Monetary Studies
January 14th, 2010
Chief Executives of Commercial Banks here present;

Distinguished Guests;
Colleagues;
Ladies and Gentlemen:
Allow me at the outset to thank you for accepting our invitation to attend this
workshop. It is indeed important that this morning we are addressing the
issue of Agent Banking, a concept we are keen to see take root innovatively in
Kenya. The Central Bank has convened this workshop for three critical
objectives:
(cid:1) The first objective is to demystify this new banking model and show how
it works;
(cid:1) Secondly, to showcase how it has worked successfully in other countries
as a platform for financial reach, inclusion and financial deepening;
(cid:1) Finally, to build consensus amongst market players on how Agent
Banking can work in Kenya supported by regulatory framework.
As you are aware, the Finance Act, 2009 that became operational at the
beginning of this month has amended the Banking Act to enable use of third
party agents by banks. Banks will therefore be able to leverage on additional
cost effective distribution channels to offer financial services. This initiative is
informed by the need to leapfrog access to financial services in Kenya. The
National Financial Access Survey of 2009 shows that 32% of Kenya’s bankable
population remains totally outside the orbit of financial services and many
more being served by the informal financial system.
Ladies and Gentlemen: Vision 2030 is premised on a safe, efficient and
inclusive financial system where savings and investment rates will more than
double. The financial sector is expected to play a pivotal role in mobilizing the
substantial resources required to finance the envisaged flagship projects. We
must therefore explore and implement innovative models that will deepen
Kenya’s financial sector to support savings and investment growth.
The Central Bank of Kenya continues to support innovations that will broaden
financial inclusion for the majority of Kenyans. In doing so, we will need to
focus on safeguards to ensure that the integrity and safety of the financial
sector is not threatened. But above all, the cost of financial services should
decline to encourage financial inclusion and reach at all corners of the country.
It is appropriate at this stage to highlight the key steps that the Central Bank
has undertaken up to now with regard to Agent Banking:
(cid:1) Initially, extensive reviews of the knowledge base in this area were
undertaken to enhance our understanding of this model.

(cid:1) Secondly, a study was commissioned to review practices in other
countries in Latin America, Asia and Africa. Bankable Frontier
Associates, an international consultancy firm that undertook the study
will be presenting their findings shortly.
(cid:1) Third, to uncover some practical insights on the model, a team from the
Central Bank, the Ministry of Finance and the Kenya Bankers
Association undertook a knowledge exchange tour of Brazil and
Colombia. These two countries have to a large extent successfully
implemented Agent Banking.
My colleagues will be sharing their insights from this knowledge exchange
later today. Let me thank the Alliance for Financial Inclusion and the Bill and
Melinda Gates Foundation for supporting this exchange that we believe will
transform the platform of financial services in Kenya, and to a large extent the
lives of Kenyans.
Ladies and Gentlemen: We have therefore so far gained invaluable insights
on the Agent Banking model. These insights will contribute to the
development of a robust regulatory framework for Agent Banking services in
Kenya. Today’s forum offers an invaluable platform to also get feedback from
industry practitioners as we develop implementation plans for Agent Banking.
It is only through forums such as this that epitomize private public
partnerships that we are able to achieve the aspirations of Vision 2030.
Ladies and Gentlemen: I also want to address fears that the Agent Banking
model in Kenya is inappropriate - that it will kill Microfinance Institutions and
SACCOs. On the contrary, it will speed up their activities. Vision 2030
envisages an inclusive financial system with space for different players to serve
the majority of Kenyans. They will develop their market niches in line with
their relative comparative advantages and strengths. In this scenario, the
Agent Banking framework will play a complementary role for all players in the
market. So these fears are misplaced. But this forum will also serve to
expound this line further.
Ladies and Gentlemen: As I draw to a close, it is important to underscore
that the Central Bank will continue to be guided in its financial sector policy
initiatives by the following tenets:
(cid:1) First, in conjunction with the Government, the creation of an enabling
environment for financial sector players.
(cid:1) Second, public private partnerships will continue to be at the core of our
initiatives. In the case of Agent Banking, today is just but the beginning

of our dialogue. As we implement the model, we will continue to engage
market players to ensure it works for the benefit of Kenyans.
(cid:1) Third, for many years, the banking sector could not reach all the corners
of the country – it was expensive to erect branches – now, with this new
innovation, they do not have to – they only need to look out for the
appropriate agent.
(cid:1) Finally, we will continue to promote innovations while ensuring that
there are adequate safeguards to foster financial sector safety and
soundness.
I am sure this workshop will expound on these important dimensions and
provide the Central Bank with the richness of policy interpretation.
It is now my distinct pleasure to declare this workshop officially
open.
Thank You