Njuguna Ndung'u: Corporate social responsibility in Kenya
Remarks by Prof Njuguna Ndung'u, Governor of the Central Bank of Kenya, on the occasion
of the launch of Equity Group/Master Card Foundation Scholarship, Nairobi, 8 February
2010.
* * *
The Rt. Hon. Raila Odinga, Prime Minister of the Republic of Kenya;
Hon. Prof. Sam Ongeri, Minister for Education;
Mr. Peter Munga, Chairman of Equity Bank;
Dr. James Mwangi, Chief Executive Officer, Equity Bank;
Distinguished Guests;
Ladies and Gentlemen:
1. I am honoured to join you this morning on this important occasion. Let me at the
outset acknowledge the presence of the Right Honourable Prime Minister and the
Honourable Minister of Education. Your presence here is testimony to the emphasis that the
Government of Kenya places on education.
2. Allow me also to salute the Equity Group Foundation and the Master Card
Foundation on the launch of scholarships for top primary school performers. This is a worthy
extension of the corporate social responsibility activities of Equity and Master Card. I urge
other entities to take up similar initiatives.
3. Developing the requisite human capital base is the cornerstone for Vision 2030.
Endogenous growth models emphasize the role of human capital. Inadequate human capital
will choke growth and condemn the country to a low equilibrium trap.
4. The focus of this Foundation on high performing students from vulnerable
backgrounds who may easily drop out of the education system should serve as the best
signalling mechanism for hard work and excellence.
5. I look forward to the success of this Foundation and the rolling out of similar
schemes by the corporate sector. I am sure that these scholarships will nurture Kenya's next
generation of transformational leaders.
6. It is now my pleasant duty to invite the Honourable Minister for Education to address
this distinguished gathering.
Honourable Minister, You have the floor.
Ajith Nivard Cabraal: Expanding financial services in Sri Lanka
Address by Mr Ajith Nivard Cabraal, Governor of the Central Bank of Sri Lanka, at the
Opening of a New Branch Office in Jaffna by The Hongkong & Shanghai Banking
Corporation Ltd, Jaffna, 11 February 2010.
* * *
My dear friends,
I am delighted to be here in Jaffna today for the opening of a new branch of HSBC, one of
the market leaders in global banking. The history of the HSBC in Sri Lanka could be traced
back to 1884, when it first commenced operations in Colombo. Today, the largest foreign
bank operating in Sri Lanka has moved to Jaffna bringing banking to the doorsteps of people
in the Northern Province. This is indeed a historic milestone.
This development did not happen by chance. It did not take place automatically. With the
liberation of our entire nation in May last year, the Government and the Central Bank have
taken determined efforts to expand financial services, facilitate and stimulate economic
activities, and develop infrastructure in the North and the East. In fact, I have personally
participated at several bank branch openings during the last few months, and our officers
have been following up the progress, and these outcomes are a result of such combined
efforts. Today, I can proudly say that an ever-growing number of financial institutions operate
in the North and that these provide diverse financial services, whilst of course we would be
the first to admit that a lot more needs to be done.
My dear friends, the development and maintenance of essential public infrastructure is an
important ingredient for sustained economic growth and poverty reduction. In particular,
health, education, electricity, housing and efficient water and sanitation services help lay the
groundwork for a productive and healthy population, capable of contributing to sustained
economic growth. We all know that as a result of the long and bloody conflict, the
infrastructure facilities in the North could not be developed as done in the other Provinces. It
is due to that fact that, with a view to fast tracking the development in the North, the
Government has now launched a well-planned, integrated, accelerated development
program titled "Vadakkin Vasantham." Under this program, the Government expects to invest
approximately Rs. 295 billion (US$ 2.7 billion) during the next 3 years, towards rehabilitation
and development activities. This program is expected to cover the rehabilitation of roads and
other transportation infrastructure, the upgrading of electricity for domestic housing and
industry, water supply, agriculture and irrigation infrastructure and the improvement of the
manufacturing framework. The Government also intends to implement a special poverty
reduction program and establish the required social safety net, quickly.
My dear friends, as we all know, the speedy resettlement of the internally displaced people
has also been a top priority for the Government. Towards this goal, many extraordinary
efforts have been taken. Out of the over 300,000 internally displaced persons who were
rescued and had to be temporarily housed in welfare camps, over 217,000 or 72% have
already been resettled. All those from Vavuniya, Mannar, Jaffna, a part of Mulativu and
Killinochchi have now returned to their homes. The others mainly from Mulativu and
Killinochchi are also to be resettled systematically without any undue delay, depending on
the speed at which the de-mining processes take place. This is an outstanding achievement
against all odds, and I believe the successful resettlement is a tribute to the deep
commitment of the Government, the tremendous efforts of our public service and the
dedicated contribution of several international organizations. I am also tempted to mention
that this surprising outcome may have been a pleasant surprise to many who at certain times
expressed the belief that the government may not have had the inclination nor the urgency to
carry out this challenging task so expeditiously.
My dear friends, the Central Bank has also contributed its mite to these normalization
processes. We have, so far, over the past 8 months, granted approvals for the establishment
of more than 90 banking outlets in the Northern Province. We have introduced a Special
Loan Scheme, also titled "Vadakkin Vasantham" to boost the livelihood development of the
people in the North. Under this scheme, an initial sum of Rs. 3,000 million has been
appropriated to be disbursed at a concessionary interest rate of 9% per annum to the eligible
micro, small and medium scale enterprises, through several Participating Financial
Institutions. The repayment period could extend up to 5 years with a grace period of 6
months. I am happy to note that over 9,000 loans amounting to Rs. 1.8 billion have already
been registered with the PFIs and disbursements of over Rs 1 billion has taken place.
My dear friends, the rich resources of the North, including its forests, agricultural land, wet
lands, lagoons and bays provide a solid base for many enterprises. Even during the conflict
period, the Northern Province accounted for 10 percent of the paddy production, 40% of Red
Onions, 10% of Chillies, 14% of Green Gram and 25% of Ground Nuts. These statistics
indicate that there would be many viable income generating activities which could be
promoted to upgrade the livelihood of the people, with the assistance of the banking sector. It
has been estimated that 129,000 fishermen, representing 20 percent of the total number of
fishermen in our country, live in 219 fishing villages in the Northern Province. In the year
2006, the total fish production from the North stood at 25,900 MT, representing 12 percent of
the country's total production. These facts also indicate that the income generating activities
in the fisheries sector too could be developed substantially in the coastal areas with the
provision of appropriate banking facilities, particularly for multi-day boats, fishing gear and
other ancillary needs such as ice plants, and storage facilities.
Over the past several years, the Central Bank has also initiated several credit schemes
applicable throughout the country, aimed at promoting regional development and poverty
alleviation. In particular, work has commenced on a new Poverty Alleviation Micro Finance
Project to cover conflict-affected districts. Approximately 3,000 beneficiary groups with more
than 12,000 low-income families have already been organized within the Jaffna peninsula
under this project. We have also fast-tracked the Agro-Livestock Development Loan scheme,
which is another scheme that could provide increased benefits to this Province.
My dear friends, during the several recent visits that I made to Jaffna, I always made it a
point to meet with the Chambers of Commerce officials, bankers, Teachers, students,
villagers, fishermen and many others. We received many valuable suggestions from them. In
particular, we received too very useful ideas to open a Central Bank's Provincial Office and
to arrange for a Special Northern Regional Development Fund for the Northern Province. I
am glad to announce today that we will implement both such initiatives in the coming months.
My dear friends, I thought it may also be appropriate to use this opportunity to make a
special appeal to the Sri Lankan Tamil Diaspora, living in all parts of the world. The decades
long conflict which sapped our combined energies in various ways, is finally behind us.
Therefore, it is now time for all of us to get together and rebuild our nation, in particular, the
areas that have suffered. We, on our part, are keen to assist the people of the North to
resume normal lives as soon as possible. Towards that outcome, we believe the Diaspora
too could play an active role and become partners in the development process of the North.
They can be an important influence to accelerate investments to these areas and thereby
support the expansion of industrial activity and tourism. Needless to say economic
opportunities in the North are expanding day by day, and I would like to urge overseas Sri
Lankans to take an early look at emerging investment opportunities in these areas,
particularly in the fields of IT, education and real estate development where they can surely
and effectively contribute.
I would also urge the Chambers of Commerce and Industries, and other similar Associations
to consider establishing international institutional frameworks and links, which would pave
the way for two-way interaction between the overseas Sri Lankan community and our local
institutions and businesses. Such relationships could then act as focal points to promote
remittances and investments into the domestic economy, as well.
My dear friends, today, we meet in the midst of a significant change in our country's
economic and political landscape. The end of the decades long conflict has resulted in the
creation of a significant positive impact, not just in the Northern Province, but also in the
entire country. To benefit by this positive outlook, it is crucial that we start new businesses
and expand on-going ventures. In this regard, I am happy to note that the HSBC, which
brands itself as the "World's Local Bank", could now offer both corporate and small
customers a full range of financial products and services. In doing so, they, as well as all
other banks who are doing business in these emerging areas, will face the challenges of
borrowers not possessing long credit histories or not possessing adequate collateral. This
situation will certainly pose challenges, but we would like to urge all bankers that they should
practice innovative cash flow based lending methods at least for 2 to 3 years, and not to be
too constrained by security based lending only. I also urge financial institutions to lend the
money mobilized from the region for the development of this region.
Finally, let me place on record my appreciation of the presence of the High Commissioner of
the UK, Dr. Peter Hayes at this opening ceremony. Your support to this effort would certainly
encourage the business community both here in Jaffna and elsewhere in Sri Lanka, and I
thank you for your gesture. Let me also congratulate HSBC on this auspicious occasion of
opening the first foreign bank branch in Jaffna. The HSBC Bank with its global connections
could now facilitate financial transactions in the North with all parts of the world, while
HSBC's presence in the Jaffna Peninsula from today onwards, would convey an important
signal to the world that tangible progress is being made in post conflict Sri Lanka. I wish Mr
Nick A Nicolaou, his team in Sri Lanka the HSBC and all their customers, especially the ones
in this area, all success.
Thank you.