CENTRAL BANK OF KENYA
Remarks
by
PROF. NJUGUNA NDUNG’U
GOVERNOR
LLAAUUNNCCHH OOFF TTHHEE PPOOSSTTBBAANNKK –– RRIIAA IINNTTEERRNNAATTIIOONNAALL MMOONNEEYY
Intercontinental Hotel, Nairobi
Thursday, 31st July 2014

Hon. Fred Kapondi, Chairman, Postbank Board of Directors;
Mrs. Anne Karanja, Acting Managing Director, Postbank Kenya;
Members of the Board of Postbank Kenya;
Representatives of RIA Money Transfer;
Distinguished Guests;
Ladies and Gentlemen:
I am pleased to join you today on this auspicious launch of the
Postbank-RIA International Money Transfer Partnership. I thank
the Board and Management of Postbank Kenya for inviting me to
this occasion. At the outset, I congratulate Mrs. Karanja on her
appointment as Acting Managing Director. I also pay glowing tribute
to Mrs. Karanja’s predecessor, Dr. Nyambura Koigi, for her
commendable stewardship of Postbank Kenya during her just ended
tenure. I wish her all the best in her future endeavours.
Ladies and Gentlemen: We are gathered here today to celebrate
another milestone in the deepening of Kenya’s financial sector. The
partnership between Postbank Kenya and RIA Money Transfer is
not only an opportunity for Postbank Kenya to satisfy the needs of
its customers but also contributes in enhancing the quality of
financial inclusion. I commend the Board, Management and Staff
of Postbank Kenya and the representatives of RIA Money Transfer
for their decision to operationalize this partnership.

With RIA Money Transfer being the third-largest money transfer
company Worldwide, we in Kenya consider ourselves privileged to
have you as a participant in our market. Your partnership with
Postbank will not only benefit Postbank but will also expand RIA’s
network through Postbank’s countrywide network of outlets.
Ladies and Gentlemen: There has been tremendous growth in
international remittances in recent years, a trend that is expected
to continue as the World becomes increasingly interlinked. The
World Bank estimated remittance flows to developing countries in
2013 to have amounted to USD414 billion, and projections to
USD540 billion by 2016.
In Kenya, the annual remittance inflows from Kenyans in
Diaspora, officially recorded from banks’ returns, rose from
USD338 million in 2004 to USD1.3 billion in 2013. This is a
commendable growth of more than 285%. These remittances, that
are playing a vital role in supporting both consumption and
investment needs of the recipients, have also become an important
source of foreign exchange to the country.
Ladies and Gentlemen: The Kenya Government recognizes the
importance of remittances in boosting economic development, and
has taken initiatives aimed at developing the market. The
Government’s development blue print, Vision 2030, seeks to harness

international remittances as a key source of capital inflows. In this
regard the Central Bank of Kenya developed and operationalized
the Money Remittance Regulations 2013. The aim of these
regulations is to introduce stand-alone money remittance providers
in Kenya. Previously all international remittances were made
through commercial banks platforms. The regulations are also
aimed at formalizing the money remittance sub-sector.
The other policy considerations that informed Central Bank of
Kenya’s introduction of Money Remittance Regulations include:
The need to remove entry barriers so as to promote competition in
the sector, encourage innovation, lower transaction costs, and
increase affordability.
Adoption of international best practices on money remittances by
developing world class payment systems infrastructure in order to
meet the higher standards of efficiency, safety, transparency,
reliability and cost-effectiveness in remittance services.
Harness alternative access channels such as mobile phone
financial services as a strategy towards reducing the cost of
services and expanding financial inclusion.
Manage risks to integrity by subjecting money remittance
operators to enhanced oversight.

Since April 2013 when the Money Remittance Regulations were
operationalised, CBK has so far licensed seven stand-alone Money
Remittance Providers. During the first half of 2014, the standalone Money Remittance Providers have transferred USD27 million
outside Kenya and received USD20.2 million. In addition, CBK has
approved several partnerships between local financial institutions
and international money transfer operators, the latest being the one
between Postbank Kenya and RIA Money Transfer.
Ladies and Gentlemen: Despite the significant progress made in
making remittance services accessible and efficient in Kenya, as in
the rest of the developing world, there are still some challenges that
we need to address. Among these are the high transaction costs,
integrity of the services and need for effective competition.
Ladies and Gentlemen: The costs of remittances to, within and from
Sub-Saharan Africa are higher relative to other regions of the
World. The World Bank’s Remittance Prices Worldwide database
estimates that the cost of remittances to and from Sub-Saharan
Africa as at the end of June 2014 stood at 11.55% compared to
Latin America at 5.57% and South Asia at 6.45%. This means that
the cost of remittance transactions to and from Sub Saharan Africa
are not only above global average levels, but are also significantly

above the 5% target set by the G8 countries on costs of remittances.
The situation is attributed to the high service fees and foreign
exchange conversion fees charged by money transfer operators,
giving rise to the so-called ‘remittance super tax’ on African
countries. This situation is not tenable and the players should join
hands with the Government to streamline the charges hence reduce
costs of money transfers to Kenya. With money remittance providers
being licensed in Kenya, we expect resultant competition to lead to
lower money transfer charges.
Lastly, Ladies and Gentlemen, as we enjoy the benefits of expanding
money remittance business, let us not lose sight of the ever
increasing threats to the integrity of financial systems. The risk of
channels of financial services such as the Postbank–RIA
partnership being used for ulterior purposes is real and constant
vigilance needs to be exercised. In this regard, the Government of
Kenya has put in place a robust legal and regulatory framework for
Anti-Money Laundering and Combating the Financing of
Terrorism. That is the reason why Kenya was upgraded from the
Financial Action Task Force (FATF) Group Dark Grey list in June
2014. What now remains is for all players in the financial sector
to play their role in ensuring compliance with the AML/CFT legal
and regulatory frameworks. This AML/CFT Regime upgrade has

lowered the country risk that we should take advantage of in
reducing costs of money transfers.
In conclusion, the Central Bank of Kenya remains committed to
continued partnership with the money remittance players in
developing policies that create an enabling environment for the
sub-sector’s growth. With these remarks, Ladies and Gentlemen, it is
now my distinct honour to declare the Postbank–RIA International
Money Transfer Partnership officially launched.
Thank You