Njuguna Ndung'u: The future of financial service delivery in Kenya
Remarks by Prof Njuguna Ndung'u, Governor of the Central Bank of Kenya, at the opening
of the 3rd AFRACA Central Banks' Forum, Kenya, 9 May 2011.
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The Deputy Prime Minister and Minister for Finance, Honourable Uhuru Kenyatta;
The AFRACA Chairman and Deputy Governor, Central Bank of Congo;
The Secretary General, AFRACA;
Governors of Central Banks here present;
Representatives of Banks, Microfinance Institutions and other Financial Institutions;
Distinguished Guests and Participants;
Ladies and Gentlemen:
I am delighted to be with all of you here in Mombasa to make some brief remarks at this very
auspicious 3rd AFRACA Central Banks Forum. I am here to welcome the Deputy Prime
Minister and Minister for Finance to officially open this forum, but before doing that, I wish to
make a few remarks. On behalf of the Central Bank of Kenya which is co-hosting this Forum
with AFRACA, let me extend a very warm welcome to all delegates to Kenya and in
particular to Mombasa, a spectacular tourist town. It is my sincere hope that you will enjoy
your stay in Kenya and will also find time during the Forum or after to sample Kenya's tourist
attractions.
Ladies and Gentlemen: AFRACA organizes this bi-annual Central Banks Forum as an
avenue for AFRACA member central banks and other regulatory bodies to share
experiences on workable solutions towards enhanced agricultural and rural financing as well
as to challenge each other on possible policy solutions to increase agricultural and rural
financing. In this regard, the Forum serves to further AFRACA's vision of "achieving a rural
Africa where people have access to sustainable financial services for economic
development".
The theme of this Forum; "Financial Services for Food Security: Leveraging on
Innovation" is quite timely and anchors well with the emerging trend whereby most of the
agricultural land is being urbanized as well as the drastic climatic changes arising from global
warming, which are posing a serious threat to food security for the future generations. Time
to generate solutions to curtail this trend is now. But from our end, we focus on financial
support investment to increase productivity in the sector.
Although Kenya's two financial access surveys conducted in 2006 and 2009 have shown
general improvements in financial access with access to formal finance improving from 19 to
23 percent; to semi-formal improving from 8 to 18 percent; informal declining from 35 to
27 percent and the excluded falling from 38 to 33 percent, access to finance for rural areas is
still low, with 64 percent of the rural populace not accessing formal financial services and
21 percent being excluded from any form of financial services. This is a huge drag to
development that is driven by financial access. We know from established wisdom that
poverty is very rural based in countries we come from. Access to finance allows the poor to
escape poverty by building their assets through savings and credit.
At the Central Bank of Kenya, we remain committed to promoting innovations that will
enhance financial access and inclusion for the people of Kenya. These reforms we believe
will inevitably enhance access to finance in rural areas. My colleagues will be alluding to
these reforms in the course of this conference.
Ladies and Gentlemen: The size of credit to the agricultural sector in Kenya by the banking
sector has risen over the last five years from USD335 million (Ksh.28.1 billion) in December
2007 to USD620 million (Ksh.52.7 billion) as at February 2011. This growth is explained
partly by the outcomes of the initiatives enumerated above. The level is expected to increase
once the reform initiatives take root.
To conclude my remarks, Ladies and Gentlemen, let me take this opportunity to reiterate
the commitment of Central Bank of Kenya to contribute to the fulfillment of AFRACA's vision.
It is my hope that this conference shall provide participants with key lessons on how to
achieve a rural Africa where people have access to sustainable financial services for
economic development. I also reiterate that it is only through the concerted efforts of all
players, governments, development agencies, donors, regulators and service providers that
we will be able to deliver on this vision.
With those few remarks, ladies and gentlemen, it is now my honour and pleasure to
welcome the Deputy Prime Minister and Minister for Finance, Hon. Uhuru Kenyatta to deliver
his keynote address and to officially open the 3rd AFRACA Central Banks Forum.
Thank you.