CENTRAL BANK OF KENYA 50TH ANNIVERSARY CELEBRATIONS
Nairobi National Museum
Speech by Dr. Patrick Njoroge
Governor, Central Bank of Kenya
September 14, 2016
As Prepared for Delivery
I am greatly honoured to welcome you this morning to celebrate 50 years of the Central
Bank of Kenya’s existence. I am grateful to all guests for honouring our invitation and
joining us to celebrate this milestone. I am particularly grateful to Your Excellency, for
graciously accepting to attend this important event despite your extremely busy schedule. I
want to pay special tribute to fellow Governors and Deputy Governors from the region,
and especially my colleagues from the EAC, who have been with us over the last two
days, and over the last 50 years.
These celebrations accord us an excellent occasion to reflect on the achievements of the
Central Bank, the challenges and opportunities that lie ahead. The history of the Central
Bank is very much intertwined with the history of the country, and most of us here today
are a part of that history. It is a rich history, and like any other, it is marked by peaks and
troughs, shadows and lights, but it is a history that we are proud of.
Soon after its establishment, the new Central Bank had to deal with an economic
slowdown in the early 70s and the effects of the oil crisis, which put increased pressure on
domestic prices and the balance of payments. Kenya’s respite came in the form of a
“coffee boom,” following a devastating frost in Brazil and the resulting increase in coffee
prices. The 1980s witnessed an increase in the number of indigenous Kenyans investing in
the banking sector. But inadequate capacity, weak internal controls and poor funds
management led to market indiscipline. The result was significant distress in the banking
sector, with the attendant ramifications on the Kenyan population, problems that persisted
into the early part of the 90s. Highly accommodative policies in the early 90s also lead to
runaway inflation, forcing the Central Bank to undertake massive liquidity mop-up
operations to reign-in inflation and restore confidence in the financial system.

Nevertheless, these challenges presented opportunities for legislative and institutional
reforms to improve the effectiveness of the Central Bank. To this end, a number of
reforms were effected, including amending the Central Bank Act to enable the Central
Bank exercise greater operational autonomy in the conduct of monetary policy, while
maintaining price stability as one of its primary objectives.
In this sketch of our history, I would also want to flag the following important
achievements.
1. The conduct of monetary policy has been improved in line with global practices,
developments in the financial sector, and the changing economic environment. The
establishment of the Monetary Policy Committee (MPC) in 2008 has enhanced the
legitimacy and transparency of monetary policy decisions, as well as guiding
expectations about the policy direction.
2. The prudential regulation and supervision of banks has been strengthened over
the years. For instance, risk management guidelines were issued in 2005. In response
to the need to strengthen the powers to resolve banks and thereby enhance the sector’s
stability, the Kenya Deposit Insurance Act was enacted in 2012. Consolidated
supervision and regulation of banks with cross-border operations has also been
enhanced. We are grateful to our development partners that have and are helping us in
this area.
3. Financial inclusion has increased substantially. Access to formal financial services
has increased from 26 percent in 2006 to over 75 percent currently. Conversely, the
proportion of the population that are financially excluded has been reduced by half
since 2006. Additionally, Kenya’s ranking of access to credit by customers advanced
88 places to 28th among 189 countries in the World Bank’s Doing Business Survey
2016.
4. Innovations in the payment systems and the integration of IT systems have
increased efficiency in the payments, clearing, and settlement systems. These
innovations include: the Real Time Gross Settlements (RTGS) Systems that allow
settlements in real time; full automation of the Clearing House and other
improvements—cheques that took 21 days to clear some 10 years ago can now be
cleared in just two days. Mobile payments have ballooned and account for over 80
percent of the number of payment transactions. The introduction of internet banking
has enabled the Central Government, Ministries and Counties to reduce their
paperwork and make payments in an efficient manner from far-flung locations.

5. The CBK continues to support the National Treasury manage its accounts. In
conjunction with the National Treasury, the government bond programme has been
revitalised and the debt portfolio skewed to the current ratio of 78 percent bonds and
22 percent bills.
It is against the background of appreciation of these achievements that we started our
journey in September 2015, toward our Golden Jubilee celebrations. The events over the
last year have been anchored on the youth, in recognition of their key role in our nation’s
growth and great expectations. Subsequently, the CBK launched and supported initiatives
targeted at empowering and inspiring the youth. These included:
The Mathare Youth Empowerment Programme that focused on enhancing financial
literacy amongst youth groups in Mathare;
The CBK internship programme that offers deserving college graduates an
opportunity to be inspired to serve in the financial sector.
Sponsorship of the Kenya Music Festival, which entailed about six million students
across the country translating the CBK mandate into poems and choral verses as well
as performing the CBK theme song Miaka Hamsini.
A Children’s Art competition in collaboration with the National Museums of Kenya
and the Kenya Bankers Association, where children translated their understanding of
the CBK’s mandate into creative pieces. The best of these are on display here at the
Museum and I trust that everyone will get an opportunity to view them.
Ladies and Gentlemen, I would be remiss if I did not mention the Central Bank’s
greatest assets—the people of the CBK. Most of them are unsung heroes in the
backrooms, banking halls, security posts, branches, cleaning crews, etc. All dedicate
themselves with professionalism, integrity, and a spirit of service. The staff of the Bank
are not only immensely talented but have also shown exceptional dependability and
dedication to the institution. I salute you! Today, we will be presenting long service
awards to 14 current and retired staff, who have the longest length of service.
As I conclude, Ladies and Gentlemen, the CBK is repositioning itself for the next 50
years, and our aspiration is to be a World-Class Modern Central Bank, reflected in our
processes, systems, and our staff. CBK will continue to strengthen prudential regulation
and supervision, with a view to supporting the continued safety, soundness and growth of
the banking sector. This is in line with Kenya’s aspirations under Vision 2030 of
promoting a sound, safe and inclusive financial system to progress towards a regional
financial services hub.

With these remarks, Ladies and Gentlemen, let me once again thank all Kenyans and our
guests for joining us in these celebrations. Hongera kwa mafanikio hadi sasa, tunaomba
mema kwa siku za mbele!
It is now my pleasure to invite the Cabinet Secretary, National Treasury, Mr. Henry
Rotich, to make his remarks.
Karibu Waziri!