CENTRAL BANK OF KENYA
Remarks by
PROF. NJUGUNA NDUNG’U
GOVERNOR
REGIONAL WORKSHOP ON CROSS-BORDER BANKING AND
CONSOLIDATED SUPERVISION IN AFRICA
Kenya School of Monetary Studies
Monday, December 6, 2010

Mr. Alex Rugamba, Director, African Development Bank Group, NEPAD,
Regional Integration and Trade Department;
Mr. Ragna Gudmundsson, IMF Resident Representative;
Distinguished Guests;
Facilitators and Speakers;
Participants;
Ladies and Gentlemen:
1. It gives me great pleasure to be here today to officially open this Regional
Workshop on Cross-border Banking and Consolidated Supervision. On behalf
of the Central Bank of Kenya, I wish to extend a warm welcome to you all to
Nairobi.
2. At the outset, I would like to thank the African Development Bank and the
International Monetary Fund for organizing this workshop and for partnering
with the Central Bank of Kenya to host this event here at the Kenya School of
Monetary Studies.
3. Ladies and Gentlemen: I thank you for taking time off to share your skills,
views and experiences and look forward to a fruitful exchange which we expect
will help in the development of a framework of cooperation to enhance effective
cross-border banking and consolidated supervision in Africa.
4. Most African countries have undertaken financial sector reforms within the
broader context of stabilization and structural adjustment programs. As part of
these reforms, they have also focused on regional integration of their real
sectors and financial sectors, on the premise that creating scale in production
and financial markets helps to promote regional trade and accelerate growth
and poverty reduction.
5. However, it has been noted that the real sector integration has proceeded at a
sustainable pace among the various African regional economic communities
whereas financial integration has progressed more slowly. The slow progress
has been partly due to an underestimation of the importance of scale for

financial market development and the lack of the necessary institutions and
policies to promote financial integration.
6. Notwithstanding the challenges faced by the banking sector in Africa, there are
initiatives by banks to increasingly embark on international operations,
primarily through subsidiary companies. Cross-border banks need effective
regulation and supervision to operate optimally across various jurisdictions.
Effective regulatory frameworks should level the playing field and eliminate
obstacles to the effective functioning of bank groups.
7. The process of development of banking activities at regional and continental
levels has brought home the need for harmonization of the different national
banking regulations and cross-border banking and consolidated supervision in
the different regions of Africa.
8. Ladies and Gentlemen: With the exception of most of the Francophone
countries belonging to the Central African Economic and Monetary Community
(CEMAC) and the West African Economic Monetary Union (UEMOA), in which
banking supervision is carried out at a regional level by a single banking
supervisory body, banking supervision and regulation frameworks vary across
the African Anglophone and Arabic Countries.
9. Given your expertise and backgrounds, I need not overemphasize the
importance of cross-border banking activities in Africa’s development agenda.
An effective cross-border banking and consolidated supervision framework in
Africa can have a positive effect on financial sector development, stability and
prevent transmission of potential contagion effects.
10. Given the challenges of successfully implementing plans for regional financial
integration programs, the question is often raised as to how best to pursue
cross-border banking and consolidated supervision in order to achieve the
desired objectives. At the heart of it all is the company law or corporate image
that holds the banking business. This goes beyond the specific banking sector
legal framework. Perhaps it is time that policymakers started reflecting on
whether we should have a standard way of looking at this.

11. A related issue concerns the strategic partnerships that are required to enhance
progress and to identify how best international development partners and other
players can assist in this process? These are issues that I expect you shall
comprehensively address over the next few days.
12. In view of the intensive programme ahead of you, I shall not extend my remarks
any further. It is my expectation that your discussions here today will provide
inputs for a framework of cooperation among Development Partners, African
central banks and other key players to strengthen cross-border banking and
consolidated supervision in Africa. I therefore take this opportunity to wish you
all a fruitful workshop and look forward to your recommendations.
13. With these remarks, Ladies and Gentlemen, it is now my pleasant duty to
declare this workshop officially opened.
Thank you.