CENTRAL BANK OF KENYA
THE 3RD REGIONAL CIS CONFERENCE
The Hilton Hotel Nairobi, February 23, 2016
Remarks by Dr. Patrick Njoroge
Governor of the Central Bank of Kenya
As Prepared for Delivery
Mr. Henry Rotich, Cabinet Secretary, The National Treasury;
Dr. Louis Kasekende, Deputy Governor, Bank of Uganda;
Dr. Charity Dhliwayo, Deputy Governor, Reserve Bank of Zimbabwe;
Mr. Wagara Melchior, 1st Vice Governor, Bank of Burundi;
Representatives of the Bank of Mexico, Bank of Zambia, BCEAO;
Representatives of the World Bank and IFC;
Mr. Habil Olaka, CEO, Kenya Bankers Association;
Mr. Charles Ringera, CEO Higher Education Loans Board & Chairman, CIS Kenya
Distinguished Guests, Ladies and Gentlemen:
Good morning. It is a great pleasure to be here with you today, to welcome all of you to
the 3rd Regional Credit Information Sharing (CIS) Conference. In particular, I extend a
special welcome to representatives of central banks from various countries around Africa
and from Mexico. That we gather once again for the third regional conference is evidence
that CIS is increasingly becoming a critical aspect of the financial system.
Ladies and Gentlemen: The theme of this conference “CIS for Innovation and
Financial Inclusion-Mikopo Kisasa!” is indeed timely as it resonates with the objectives
we have set to drive the Kenyan financial sector. These objectives include innovation,
lower cost of credit, transparency and disclosure. Having an inclusive financial sector goes
beyond mere access to financial services to include consumer protection and making sure
that the duty of care owed by financial institutions to their customers is well executed. In
addition, the provision of sufficient information to assist consumers in making informed
financial decisions is a fundamental enabler in enhancing financial inclusion.

As you are all aware, information asymmetry in the financial sector is very prominent and
as such one of the hindrances to deeper financial inclusion. To eradicate this, transparency
in the pricing of credit by commercial banks and other financial institutions cannot be over
emphasized. It is in this regard that the Central Bank of Kenya has started publishing the
average lending rates for various loan products as well as the overall average weighted
lending rates by commercial banks. This will enable the borrowing public to make
informed borrowing decisions, which in turn will facilitate a competitive banking sector
with high quality and reasonably priced products.
I know that the topic of low cost of credit has been over-analysed. However, this
conference brings together creative minds that can innovate new affordable products
designed to suit the needs of the customers at the bottom of the pyramid. This would also
require financial institutions to align business models to support, especially, Small and
Medium Enterprises (SME) lending. Further, lower cost of credit can also be achieved
through continued collaborative efforts between actors in the sector to develop innovative
distribution channels. It is therefore paramount that financial institutions embrace financial
innovation in order to enhance coverage of financial services and reduce transaction costs,
particularly through electronic and mobile money transfers.
With regard to innovation, I would like to note that CIS is one of the most inventive
mechanisms in Kenya that has contributed immensely to the development of the financial
sector. Despite being a young concept, the success achieved by CIS is remarkable. This
has been duly recognized in Kenya’s enhanced rankings in the World Bank Doing
Business Report, 2016. In the Ease of Getting Credit Indicator, Kenya emerged position
28 globally. This is a significant improvement from position 118 in 2015, largely
attributed to the developments in the CIS environment such as the sharing of full file data
by both Commercial and Microfinance Banks.
However, ladies and gentlemen, despite this remarkable progress, we have three critical
concerns that I present as challenges to the credit market regarding CIS.
First, it is said that lenders are quick to inform consumers when their credit profile is poor,
but are mute when the score is good. Consequently, borrowers only know about the credit
bureau when there is a problem. This needs to change. Banks in Kenya have been sharing
positive data for two years now, and therefore must begin to inform and reward their low
risk customers with better terms.

Secondly, lenders must be willing to invest in efforts to ensure highest standards of data
quality. This is important because a borrower’s credit report is a score-card on the
character of individuals and corporates. It is imperative that every effort is made to
provide accurate and updated information on each of their customers, without regard to
status or social standing.
Thirdly, there is need to address consumer complaints associated with credit information
as promptly as possible. Where these issues escalate to disputes, lenders should explore
alternative dispute resolution mechanisms. I am confident that the deliberations regarding
Alternative Dispute Resolution, which are part of this conference, will provide insights
into the critical aspects of consumer protection that are needed to ensure credibility of the
whole mechanism.
On our part as the Central Bank, we will continue to play our supervisory role effectively,
and ensure that we monitor very closely compliance with CIS reporting requirements,
given that sharing comprehensive information on a timely basis is the only way this
mechanism can reach its full potential. It is important to note that central banks are also
beginning to explore effective use of credit information to strengthen banking supervision.
I am informed that the Bank of Mexico offers a useful case study that will be discussed in
the first session of this Conference. It is important that central banks invest in the
analytical skills needed for effective utilization of the data for supervision and monetary
policy.
I wish you all very fruitful discussions as you share experiences that will shape the future
of CIS in Kenya, Africa and beyond. It is now my distinct pleasure to welcome Cabinet
Secretary Henry Rotich to officially open the conference.
Karibu Bwana Waziri!
Thank you.