CENTRAL BANK OF KENYA
REMARKS
by
PROF. NJUGUNA NDUNG’U
GOVERNOR
CENTRAL BANK OF KENYA
15TH EAST AFRITAC STEERING COMMITTEE MEETING
Lake Naivasha Sopa Lodge, Naivasha, Kenya
Monday, 8th April 2013

Members of the East AFRITAC Steering Committee here present;
Mr. Xavier Maret, the East AFRITAC Centre Coordinator;
Mr. Ragnar Gudmundsson, IMF Resident Representative to Kenya;
East AFRITAC Advisors and Consultants;
Distinguished Ladies and Gentlemen:
1. It is my pleasure to officially open the 15th East AFRITAC Steering
Committee meeting. On behalf of the Government of Kenya, I take this
opportunity to welcome you all to Kenya. In particular, I would like to welcome
you to Naivasha, one of our leading horticultural producing regions and a tourist
destination at the heart of the Great Rift Valley.
2. I know that we have some good work cut out for us in the next one and a half
days but at the same time I would like to encourage all of you and especially
those visiting the region for the first time, to find time to sample our beautiful
tourist attractions in Naivasha before you depart.
3. Naivasha is also the home town of the roses that are cherished in Europe
and the town is also located in the precincts of the panoramic landscapes of the
Great Rift Valley which you must have enjoyed as you descended the escarpment
on your way to this resort.
Ladies and Gentlemen
4. Some of you may be wondering why I am opening the 15th East AFRITAC
Steering Committee meeting this evening instead of tomorrow, 9th April 2013 as
had been indicated in the programme. It is for a good reason because on the 9th
of April we will be witnessing the culmination of a process that started way back
in 2010 when we promulgated our new constitution.
5. The Kenyan Constitution 2010 brought in new governance structures and
processes including the way we conduct elections and procedures for transfer of
political power. This is why we had to adjust the programme to allow my
participation during the inauguration of the Fourth President of the Republic of
Kenya on Tuesday, 9th April 2013. Given the critical importance of this meeting,
we thought it should proceed as planned.
Ladies and Gentlemen

6. Let me now turn to the subject matter of our meeting and in this regard, I
would like to first and foremost express our sincere gratitude to East AFRITAC
for the support that we have received over the years. Through this support, we
have been able to implement far reaching reforms in many areas including public
financial management, revenue administration, financial sector regulation as
well as macroeconomic policy analysis. I am sure you will agree with me that
these reforms have contributed substantially in the growth and development of
our economies that we have witnessed in the region in recent years.
7. In Kenya for example, East AFRITAC has been our main source of
Technical Assistance in implementing the public financial management aspects
that were required to be implemented in a time bound manner by our
Constitution 2010. In this regard, we have received valuable and timely support
in enacting the Public Finance Management Act 2012 and the accompanying
regulations, reengineering IFMIS, setting up the National Treasury, Performance
Based Budgeting, revenue administration, and financial reporting and in
developing the VAT Bill that is now in Parliament.
8. These are just a few examples of the critical support that we have received
from East AFRITAC. But one common feature of the support in these areas is
that the Technical Assistance has been relevant and demand driven primarily to
meet the requirements of our Kenya Constitution 2010. I must add that
Kenyans, through the National Assembly have also been very proactive in
demanding many of these reforms especially in performance based budgeting
and financial reporting and accounting. There is therefore strong ownership of
these reforms and this is a clear indication that they will be sustained.
9. I believe what I am saying for Kenya should be true for all the seven
recipient countries of East AFRITAC’s technical assistance and capacity building
initiatives. In this regard, and on behalf of all the seven recipient countries, I
would like to take this opportunity to once again thank the IMF and the other
contributing partners without whose support these reforms would not have been
possible.
10. But let me add that while we have made substantial progress, we need to
do a lot more to in order to advance our reform agenda and in this regard, I

welcome this meeting because it will help us in assessing implementation of our
work plan for the financial year 2013 and also consider the proposed work plan
for the financial year 2014.
11. Let me also say that the mid-term evaluation of East AFRITAC’s
performance will play a useful role in establishing the exact extent to which we
have achieved the objectives we have set together. It will also inform any
necessary realignment to sharpen our focus to the most relevant and priority
areas. The evaluation report to be presented on Wednesday should therefore be
of keen interest to the Steering Committee.
Ladies and Gentlemen
12. Turning to the financial sector, I would like to point out that the continued
expansion of players in the sector across borders is another development that
needs our attention. In order to effectively regulate and supervise such players,
adequate capacity building on cross border supervision is necessary.
13. I appreciate the East AFRITAC’s technical assistance and capacity building
to the recipient countries on consolidated supervision, risk based supervision
and establishment of supervisory colleges. The knowledge base established has
proved useful for the supervisors to facilitate innovations by the players without
comprising the stability and integrity of the financial systems of the region.
These are the pillars of strong institutions of the regulators and the regulated.
14. The dynamic reforms being witnessed in the region point to the continued
need for technical assistance and capacity building to be able to derive optimum
results. In this regard, I see the role of East AFRITAC becoming more
pronounced than ever before. The current areas of focus by East AFRITAC’s
technical assistance and capacity building remain relevant. However, I expect
that the mid-term evaluation will offer suggestions on new areas of focus that
will ensure that East AFRITAC remains relevant to the evolving needs of
members.
Ladies and Gentlemen
15. As I conclude, let me make one observation. I am informed that at the end
of the two-day meeting, there will be an excursion to the Olkaria Geothermal site.

This is part of a major initiative by the Kenyan government aimed at increasing
the use of green energy while at the same time addressing the adverse effects of
climate change by exploiting natural steam that we have in abundance along the
Great Rift Valley.
16. I am sure that some of you may be asking how this is related to what we
are doing here. In Kenya, we do not have sufficient hydro power potential and we
have been increasingly relying on thermal generation which is very expensive
and unfriendly to the environment. As such, the government has been
subsidizing thermal generation to make it affordable and this has substantial
fiscal implications. With geothermal generation, a lot of resources can be saved
that would be allocated to other priority areas. I therefore urge you to spare
some of your time to participate in the excursion.
Ladies and Gentlemen
17. I would not wish to take any more of your time but before I conclude, I
once again take this opportunity to welcome you all to Kenya and wish you an
enjoyable stay. I wish all of you a fruitful meeting.
18. With these remarks, it is now my pleasure and honour to declare the 15th
East AFRITAC Steering Committee meeting officially open.
Thank you all and enjoy the rest of the evening