CENTRAL BANK OF KENYA
Barbados Chamber of Commerce and Industry Digital Conference
Kenya’s Digital Transformation
Keynote Address by Dr. Patrick Njoroge
Governor, Central Bank of Kenya
Wednesday, April 6, 2022
As Prepared for Delivery
Good morning! I am delighted to participate in the Barbados Chamber of Commerce
and Industry (BCCI) Digital Conference. I am grateful for the invitation to this
conference with its bold theme—Adapt and Change: We Must. It is also a great honour
to have the opportunity to address a second BCCI event. As you may recall, I was
privileged to address a BCCI event in September 2019, when I led a Kenyan delegation
to Barbados that paved the way for Prime Minister Mia Motley’s visit to Kenya three
months later.
I wish to note that the Prime Minister’s visit to Kenya in December 2019 and President
Uhuru Kenyatta’s visit to Barbados in October 2021, cemented Kenya’s already strong
connection to Barbados and indeed the Caribbean people, which has been built over the
years. I also wish to express my gratitude to my brother Governor Cleviston Haynes of
the Central Bank of Barbados for the warm hospitality he extended us at that occasion.
Over the last two decades, the world has changed drastically. Kenya has changed,
Barbados has changed. Globalization on the back of the internet revolution in the 1990s
brought markets closer together and opened up distant markets to disparate producers
from across the globe. However, over the last two decades the internet revolution shifted
to mobile phones with their near ubiquity, and quite literally placed the power of
globalization at the fingertips of citizens everywhere. In 2000 mobile phone
penetration—measured as mobile phone subscription as a percentage of population—was
at 39, 10 and 0.4 percent in the United States, Barbados and Kenya, respectively. By
2020 the mobile phone penetration in all three countries was over 100 percent, with
Kenya recording the highest at 114 percent. It is therefore fitting that the focus of my
address today is Kenya’s digital transformation and how we can deepen our
relationships in addressing the challenges facing our citizenry.

However, I need to acknowledge that not all developments over the last 20 years are to
be seen approvingly—I am sure some Barbadians will look back with nostalgia to when
the Concorde made regular flights to Barbados, one of only four destinations in the
world.
Kenya has had remarkable success in its digital transformation as you have seen in the
introductory video clip. Significantly, digital financial services have underpinned
Kenya’s threefold increase in financial access to 83.7 percent of all adults in 2021, from
26.7 percent in 2006. The seed for this transformation was planted in 2007, with the roll
out of mobile phone money transfer services. This was in response to a send money home
need by Kenyans in urban areas to rural areas. From this basic financial platform that
was powered by mobile phones, an elaborate financial services ecosystem has evolved
today, extending beyond money transfer to among others credit, savings, insurance,
capital markets and pension products.
How did the incumbent banks respond to these developments? First, with some
suspicion, but soon after they saw the possibility of cooperating with the telcos and
begun working with them to develop new products and appropriate services.
Consequently, the importance of bank-branch channels has reduced while digital
channels (mobile phone and internet) have increased in dominance. Mobile phone and
internet transactions account for 77.1 percent and 2.3 percent respectively, of the number
of bank transactions, and 14.6 percent and 21.9 percent respectively, of the value of bank
transactions. With a mobile phone penetration of 132 percent, a large swathe of Kenya’s
populace now partakes of anytime anywhere financial services.
Advances in technology and innovations have accelerated the pace and raised the
potential for digitalization. The COVID-19 pandemic also served to catalyse
digitalization not just in financial services but also in other spheres including health,
education and entertainment. But much more needs to be done to fully benefit from the
digital economy. Digitalization is the next frontier for placing citizens at the heart of any
nation’s development and more importantly raising their standards of living. In his
remarks at this Conference yesterday, Minister Davidson Ishmael highlighted that people
expect the delivery of services to not only be effective but also fast, and that there is a
huge transformation potential of rebuilding and delivering public services digitally.

It is with this in mind, that Kenya’s Digital Economy Blueprint was launched in May
2019. The vision of the blueprint is a digitally empowered citizenry, living in a
digitally enabled society. We aspire for a Kenya where every citizen, enterprise and
organization have digital access and the capability to participate and thrive in the digital
economy. To maximize our benefits, we must build ecosystems that facilitate digital
transactions nationally, regionally and globally. This is the thinking that informed
Kenya’s Digital Economy Blueprint that outlines five pillars as the foundation for a
thriving digital economy. The pillars are: Digital Government, Digital Business,
Infrastructure, Innovation-Driven Entrepreneurship, and Digital Skills and Values.
Against this backdrop, how do we build on the digitalization momentum and put our
citizens back on the path to shared prosperity following the ravages of COVID-19
pandemic? Kenya’s digital transformation has taken over 15 years, but how can
Barbados and indeed the Caribbean region leapfrog in a much shorter period? What do
we learn from Kenya’s incremental change that would help accelerate Barbados’ digital
transformation? I will highlight three broad themes from our journey that could hasten
the pace for Barbados.
First, we must put people at the centre of the financial system. For both the public
and private sector, the key question must be what are the needs of the people particularly
in the context of the Sustainable Development Goals (SDGs), and how will digitalization
work for them? How do we get citizens to participate for instance in financing the health,
education and other social services that are critical for their lives and livelihoods? We
must be clear on what the vision for our citizens is, and then all else will fall in place. I
acknowledge that I have benefited immensely from Prime Minister Mia Motley’s clarity
of vision on these and related matters.
In order to align all stakeholders in Kenya, the Central Bank of Kenya (CBK) recently
launched the National Payments Strategy, 2022-2025. The Strategy seeks to realise a
vision of “a secure, fast, efficient and collaborative payments system that supports
financial inclusion and innovations that benefit Kenyans.” The vision will be anchored
on core principles of trust, security, usefulness, choice and innovation. The Strategy was
developed through a consultative process, identifying what the problems are and setting
out a roadmap for public and private actors to develop appropriate solutions. I certainly
encourage you to look at this Strategy, as there are some elements that are readily
applicable to Barbados.

Second, is the courage to act. In 2007, when mobile phone transfer services started in
Kenya, we did not have a comprehensive National Payment System (NPS) legislative
framework. While a few years earlier, in 2003, the central bank’s mandate had been
expanded to incorporate the oversight of efficient and effective payments systems, the
implementing legislation had yet to be crafted. Our easy choice in 2007, would have
been to ask the innovators of mobile money transfer services to wait until we had the
NPS Act and Regulations in place. Kenya and Barbados given their common heritage
have a fairly similar legislative process that can take years to conclude.
In the circumstances, we took the narrower route laced with risks to allow the innovation
to proceed in a controlled environment, a test-and-learn approach. This was way before
sandboxes came into vogue. We focused on the business model, the risks and what the
mitigants were. But more importantly, we were motivated by the problem we had with
low financial inclusion levels and inefficient money transfer systems.
Does Barbados have the courage to act? Are you waiting for all the pieces to fall in
place? As you ponder on this question, I was struck by a comment made last week by the
Barbados High Commissioner to Kenya, H.E. William McDonald: “Barbados may have
a population of 300,000, but its ambition is for 60 million.” And the words of the
National Anthem are a faithful reminder of what is possible:
We have no doubts or fears
Upward and onward we shall go
Inspired, exulting, free
And greater will our nation grow
In strength and unity.
Third, co-operation and collaboration are key to creating a thriving financial
ecosystem. Synergies between regulators, policy makers, financial institutions and other
actors are critical to financial services transformation. Traditional adversarial relations
between regulators and the regulated, and a race-to-the-bottom by competing financial
institutions have no place in this new world. Crucially, do banks see emerging payment
service providers and fintechs as fierce competitors out to eat their lunch? In the world
of anytime anywhere financial services, standalone models will not work, and it is the
well-coordinated ecosystems that will deliver for our citizens.

There is certainly no room for zero-sum games and we must aim for win-win outcomes.
This is why the symbiotic relationship between Kenya and Barbados to grow our
respective financial sectors is particularly welcome. Together, we will go far for the
benefit of our citizens. In the words of a proverb, “If you want to go fast, go alone. If you
want to go far, go together.”
Incidentally, last week I welcomed to our offices in Nairobi, a delegation from Barbados
that was accompanied by the Barbados High Commissioner to Kenya. The delegation
was aptly accompanied by representatives from Kenya’s largest Payment Service
Provider and two young Kenyan fintechs who were part of the Kenyan delegation to
Barbados last year. The Kenyan fintechs are looking to work with you in Barbados to
resolve problems in the credit unions and insurance spaces. I am delighted that these
conversations are taking place and will certainly bear fruit.
Ultimately what matters for our citizens is not who is providing the solution, but are their
problems being resolved. Let me allow, a Kenyan business lady to speak to this in the
following video clip.
I will finish with a story I have been retelling the last few years. At a regional conference
a few years ago, I struck a friendship with an older participant from another country. At
one point he told me a story about how he had travelled somewhere and had seen an old
man planting coconuts trees. They talked and he remarked to the old farmer, “I really
don’t think you will eat the fruit from the coconut trees that you are planting.” To which
the man replied, “Yes, I know. I am planting these coconut trees for another generation,
and I eat fruit from this coconut tree that I did not plant.” My new friend turned to me
and said: “Society is at its best when people plant coconuts that they do not expect to eat
from.”
Dear friends, we must face the future with hope and courage. Your Kenyan brothers and
sisters stand ready to journey with you on the road towards a digital society. We have a
lot in common and a lot to share for the benefit of our citizens. And yes, let’s plant
coconuts.
We write our names on history's page
With expectations great
Strict guardians of our heritage
Firm craftsmen of our fate.
I wish you fruitful deliberations and look forward to the outcomes of this important
conference.
Thank You!