CENTRAL BANK OF KENYA
PETROLEUM INSTITUTE OF EAST AFRICA (PIEA) 2015 GALA DINNER
Safari Park Hotel, Nairobi
Remarks by Dr. Patrick Njoroge
Governor of the Central Bank of Kenya
October 30, 2015
As Prepared for Delivery
Good evening! I am greatly honoured to be here today at this auspicious Gala
Dinner of the Petroleum Institute of East Africa (PIEA). I am particularly grateful
to the Institute for the invitation, which gives me the opportunity to interact with
members of the Institute for the first time as Governor of Central Bank of Kenya. I
note with satisfaction the important role played by the Institute in promoting
regular interactions between the players in the oil industry. I am happy to note that
the Institute not only focuses on issues of interest to its members, but also on issues
pertinent to the economy.
At the outset, I want to say a few words about the economy. Kenya’s economic
growth has remained robust despite the challenges emanating from the slowdown
in the global economy, the increased volatility in the global financial markets, and
our own security difficulties. Most emerging and frontier market currencies have
been volatile against the U.S. dollar largely reflecting the strong U.S. dollar, and
uncertainty on the timing of the increase in U.S. interest rates. Growth is projected
at about 6 percent in 2015, from 5.3 percent in 2014, supported mainly by higher
public and private investment. Notably, the monetary policy measures adopted by
the Central Bank have stabilized the exchange rate and contained inflation within
the Government’s target range. Overall inflation declined from 7 percent in June
2015, to 6 percent in September 2015. The foreign exchange reserves (at 4.2
months of import cover) remain adequate to address short term shocks. In addition,
the Central Bank is working closely with the National Treasury to ensure the wellcoordinated implementation of monetary and fiscal policies.

The theme for this year’s Gala Dinner—Connecting the Dots for Kenya’s
Development—underscores the importance of identifying and implementing
effective growth strategies, as well as the need for collaboration among key players
in the economic management of our country. The Central Bank and the institutions
under the umbrella of the Institute have an important role to play in this regard. I
would like to highlight a few dots.
The first dot concerns the Central Bank’s mandate of maintaining price stability,
ensuring financial stability, and promoting an efficient payments system. Price
stability enhances the environment for productive investment and long-term
growth. As in other oil-dependent economies, Kenya is highly vulnerable to supply
disruptions and oil price movements. In particular, fuel prices are important drivers
of inflation, as energy prices contribute about 27 percent of the overall consumer
price index. In addition oil imports account for about 20 percent of total imports.
This shows the importance of your industry to the economy and the need for
measures to mitigate the risks that arise.
The second dot concerns partnership between the private and public sectors. An
appropriate partnership of these institutions should be anchored on their respective
mandates and objectives. An excellent example of this partnership relates to the
significant transformation in financial inclusion driven by mobile and agency
banking. On the one hand, the Central Bank mandate of promoting efficient
payment systems extends to the use of innovative products, leveraging new
technologies such as the mobile phone. On the other hand, service providers and
financial institutions have pursued growth opportunities for their business, and
worked closely with the Central Bank to implement these innovations and address
the attendant risks. The result has been a tremendous expansion in access to
financial services including rural areas. A recent survey indicates that 73 percent of
the adult population in 2015 lives within three kilometers of a financial service
access point, compared to 59 percent in 2013. But much more remains to be done,
and the Central Bank is positioning itself for the new challenges. I would challenge
the members of your Institute to adopt a similar approach to partnership with the
government, regulatory agencies, and stakeholders, to develop and sustain
petroleum standards, guidelines and best practices.

The third dot relates to promoting professionalism and high business standards.
The Central Bank certainly fully embraces this aspiration, with our objective of
becoming a world-class institution, in the context of celebrating its 50th anniversary
in September 2016. I note that the Institute’s mission is to provide a forum for
expertise and excellence, promoting professionalism and free enterprise in the
industry. This is crucial to ensure that the industry remains vibrant and competitive.
However, I would want to underscore the need for the highest standards in
corporate governance, including financial oversight. I am happy to note that
following the recent discoveries of oil deposits in the region, the growth potential
and opportunities for the oil industry appear bright. It is imperative that these high
standards permeate the industry quickly.
Finally, ladies and gentlemen, I want to challenge you to work towards enhancing
competition in the sector, by leveraging greater innovation and efficiencies. In this
way, the sector will continue supporting the country’s positive economic outcomes
and prospects. Allow me once again to applaud the Institute for its contribution in
the development of the oil industry. I would like to assure the Institute of the
Central Bank’s continued support and collaboration as we endeavor to support
growth in our economy.
Thank you!