CENTRAL BANK OF KENYA
Address by
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Kenya School of Monetary Studies
Monday, May 6, 2013
Mr. Saleh Usman Gashua, Secretary General, AFRACA;

Prof. Kinandu Muragu, Executive Director, KSMS and AFRACA’s subregional chair for East Africa;
Facilitators;
Distinguished Guests and Participants;
Ladies and Gentlemen;
It is my pleasure to officially open this knowledge exchange programme on Mobile
and Agency Banking in Kenya. On behalf of the Kenya School of Monetary Studies
(KSMS), which is co-hosting this programme, let me extend a warm welcome to you
all to Kenya and in particular to KSMS, a leading regional training institution in
financial matters. I sincerely hope that you will enjoy Kenya’s hospitality and tourist
attractions during your stay in Kenya.
Ladies and Gentlemen: At the outset I would like to commend AFRACA for its
continued efforts towards enhanced agricultural and rural financing environment.
Forums like this allow AFRACA members not only to learn from each others’
experiences but also to challenge each other on possible policy solutions to increase
agricultural and rural financing.
As you may be aware, financial inclusion has lately assumed a central place in
financial regulators mandates and is a public policy. The more formally financially
included an economy is, the greater the likelihood of attaining financial
developments and financial stability. In this regard, AFRACA’s vision of achieving a
rural Africa where people have access to sustainable financial services for economic
development is very relevant to the financial inclusion objectives of AFRACA’s
members.
Ladies and Gentlemen: AFRACA’s decision to host you for this knowledge
exchange on mobile and agency banking in Kenya is a well thought out decision. This
is because over the last 6 years millions of people, most of whom were financially
excluded, have been brought into the formal financial sector through successful
rollout of innovative mobile phone financial services products (MFS). Kenya has
witnessed increased competition and diversity in the mobile phone financial services
space with more mobile phone operators launching mobile money products.
Financial institutions have also increasingly partnered and integrated their operating
platforms with those of mobile phone financial services platform to leverage on the
convenience and efficiencies they present. As a result, the unit costs for some of the
financial products have been lowered significantly.
Ladies and Gentlemen: The potential of mobile phone technology to bridge the
financial access barriers of distance and cost seems un-rivalled in Africa. In
recognition of this, the Alliance for Financial Inclusion (AFI) brought together
policymakers and regulators from 18 African countries that are AFI members to

launch the African Mobile Phone Financial Services Policy Initiative (AMPI) in
February 2013. The aim of AMPI is to share experiences and develop policy solutions
for extending financial inclusion to the Continent’s large unbanked populace through
the use of Mobile phone financial services.
Ladies and Gentlemen: Allow me now to briefly share with you the Central Bank
of Kenya’s role in propelling financial inclusion through mobile phone financial
services. Even before the enactment of the National Payment Systems Act, the
Central Bank of Kenya took a proactive role in facilitating consultations on proposals
by the telecommunication companies to introduce mobile phone money transfer
services. The Central Bank of Kenya continuously supported the rollout of innovative
products driven by mobile phone technological platforms using a ‘test and learn’
approach that allows innovations to take place while ensuring that the necessary
safeguards are in place to mitigate the potential risks. This approach has allowed
CBK to partner with both financial service providers and telecommunication
providers as they seek to introduce innovative solutions into the market that are
reliant on technology. This approach has seen an:
a) Increase in mobile phone participants. Close to 20 million people are
served by over 60,000 telecommunication companies agents handling over
USD 54.4 million worth of Mobile phone financial service transactions per day
in Kenya. These have achieved, with the stability and integrity of the financial
system remaining intact.
b) Introduction of Agent Banking by both banks and deposit taking
microfinance institutions. The aim was to increase the level of formal financial
inclusion in un-served and underserved areas. This has led to close to 17,000
approved bank agents’ facilitating over 45 million transactions valued at over
Kshs 232 billion (USD 2.76 billion), mainly leveraging on mobile phone
technology.
c) Evolution of the mobile phone money transfer system to provide bill
payments, savings/deposit mobilization, and credit application, all operated in
the same platform with lower costs to the public.
d) Adoption of mobile phone technology by other sub-sectors such as
pensions, insurance and capital markets to provide convenience and efficiency
to their clientele. The information capital built within mobile phones is an area
of great interest to credit reference bureaus and the credit market in general.
Ladies and Gentlemen: The main lesson we have learnt is that financial inclusion
will succeed once we understand the market segments and the delivery channels that
are appropriate for those segments for financial inclusion to succeed. I would not
wish to pre-empt the details of CBK’s experiences in regulation and supervision of

mobile phone financial services and agency banking. My colleagues will be taking you
through the detailed journey we have travelled during the day’s afternoon session.
In conclusion, Ladies and Gentlemen, it is worth noting that the potential to
expand financial inclusion is still huge and mobile phone technologies are proving
very useful in this front. At the end of this programme, I expect the unrivalled
Africa’s pace of adoption of mobile phone financial services to be upheld. Finally, let
me take this opportunity to reiterate the commitment of CBK to contribute to the
fulfillment of AFRACA’s vision. It is my hope that this programme shall provide
participants with key lessons on how to achieve a rural Africa where people have
access to affordable financial services for economic development – to allow them to
escape poverty through savings and affordable credit.
With these remarks, Ladies and Gentlemen, it is now my pleasure and honour to
declare the 2013 Technical Cooperation among Developing Countries Programme on
Mobile and Agency Banking officially opened. I wish you all fruitful deliberations.
Thank you for your attention.