Njuguna Ndung'u: Implementing reforms in Kenya
Remarks by Prof Njuguna Ndung'u, Governor of the Central Bank of Kenya, at the 15th East
AFRITAC Steering Committee Meeting, Naivasha, 8 April 2013.
* * *
Members of the East AFRITAC Steering Committee here present;
Mr. Xavier Maret, the East AFRITAC Centre Coordinator;
Mr. Ragnar Gudmundsson, IMF Resident Representative to Kenya;
East AFRITAC Advisors and Consultants;
Distinguished Ladies and Gentlemen:
It is my pleasure to officially open the 15th East AFRITAC Steering Committee meeting. On
behalf of the Government of Kenya, I take this opportunity to welcome you all to Kenya. In
particular, I would like to welcome you to Naivasha, one of our leading horticultural producing
regions and a tourist destination at the heart of the Great Rift Valley.
I know that we have some good work cut out for us in the next one and a half days but at the
same time I would like to encourage all of you and especially those visiting the region for the
first time, to find time to sample our beautiful tourist attractions in Naivasha before you
depart.
Naivasha is also the home town of the roses that are cherished in Europe and the town is
also located in the precincts of the panoramic landscapes of the Great Rift Valley which you
must have enjoyed as you descended the escarpment on your way to this resort.
Ladies and gentlemen
Some of you may be wondering why I am opening the 15th East AFRITAC Steering
Committee meeting this evening instead of tomorrow, 9th April 2013 as had been indicated in
the programme. It is for a good reason because on the 9th of April we will be witnessing the
culmination of a process that started way back in 2010 when we promulgated our new
constitution.
The Kenyan Constitution 2010 brought in new governance structures and processes
including the way we conduct elections and procedures for transfer of political power. This is
why we had to adjust the programme to allow my participation during the inauguration of the
Fourth President of the Republic of Kenya on Tuesday, 9th April 2013. Given the critical
importance of this meeting, we thought it should proceed as planned.
Ladies and gentlemen
Let me now turn to the subject matter of our meeting and in this regard, I would like to first
and foremost express our sincere gratitude to East AFRITAC for the support that we have
received over the years. Through this support, we have been able to implement far reaching
reforms in many areas including public financial management, revenue administration,
financial sector regulation as well as macroeconomic policy analysis. I am sure you will agree
with me that these reforms have contributed substantially in the growth and development of
our economies that we have witnessed in the region in recent years.
In Kenya for example, East AFRITAC has been our main source of Technical Assistance in
implementing the public financial management aspects that were required to be implemented
in a time bound manner by our Constitution 2010. In this regard, we have received valuable
and timely support in enacting the Public Finance Management Act 2012 and the
accompanying regulations, reengineering IFMIS, setting up the National Treasury,
Performance Based Budgeting, revenue administration, and financial reporting and in
developing the VAT Bill that is now in Parliament.
These are just a few examples of the critical support that we have received from East
AFRITAC. But one common feature of the support in these areas is that the Technical
Assistance has been relevant and demand driven primarily to meet the requirements of our
Kenya Constitution 2010. I must add that Kenyans, through the National Assembly have also
been very proactive in demanding many of these reforms especially in performance based
budgeting and financial reporting and accounting. There is therefore strong ownership of
these reforms and this is a clear indication that they will be sustained.
I believe what I am saying for Kenya should be true for all the seven recipient countries of
East AFRITAC's technical assistance and capacity building initiatives. In this regard, and on
behalf of all the seven recipient countries, I would like to take this opportunity to once again
thank the IMF and the other contributing partners without whose support these reforms would
not have been possible.
But let me add that while we have made substantial progress, we need to do a lot more to in
order to advance our reform agenda and in this regard, I
welcome this meeting because it will help us in assessing implementation of our work plan
for the financial year 2013 and also consider the proposed work plan for the financial year
2014.
Let me also say that the mid-term evaluation of East AFRITAC's performance will play a
useful role in establishing the exact extent to which we have achieved the objectives we have
set together. It will also inform any necessary realignment to sharpen our focus to the most
relevant and priority areas. The evaluation report to be presented on Wednesday should
therefore be of keen interest to the Steering Committee.
Ladies and gentlemen
Turning to the financial sector, I would like to point out that the continued expansion of
players in the sector across borders is another development that needs our attention. In
order to effectively regulate and supervise such players, adequate capacity building on cross
border supervision is necessary.
I appreciate the East AFRITAC's technical assistance and capacity building to the recipient
countries on consolidated supervision, risk based supervision and establishment of
supervisory colleges. The knowledge base established has proved useful for the supervisors
to facilitate innovations by the players without comprising the stability and integrity of the
financial systems of the region. These are the pillars of strong institutions of the regulators
and the regulated.
The dynamic reforms being witnessed in the region point to the continued need for technical
assistance and capacity building to be able to derive optimum results. In this regard, I see
the role of East AFRITAC becoming more pronounced than ever before. The current areas of
focus by East AFRITAC's technical assistance and capacity building remain relevant.
However, I expect that the mid-term evaluation will offer suggestions on new areas of focus
that will ensure that East AFRITAC remains relevant to the evolving needs of members.
Ladies and gentlemen
As I conclude, let me make one observation. I am informed that at the end of the two-day
meeting, there will be an excursion to the Olkaria Geothermal site. This is part of a major
initiative by the Kenyan government aimed at increasing the use of green energy while at the
same time addressing the adverse effects of climate change by exploiting natural steam that
we have in abundance along the Great Rift Valley.
I am sure that some of you may be asking how this is related to what we are doing here. In
Kenya, we do not have sufficient hydro power potential and we have been increasingly
relying on thermal generation which is very expensive and unfriendly to the environment. As
such, the government has been subsidizing thermal generation to make it affordable and this
has substantial fiscal implications. With geothermal generation, a lot of resources can be
saved that would be allocated to other priority areas. I therefore urge you to spare some of
your time to participate in the excursion.
Ladies and gentlemen
I would not wish to take any more of your time but before I conclude, I once again take this
opportunity to welcome you all to Kenya and wish you an enjoyable stay. I wish all of you a
fruitful meeting.
With these remarks, it is now my pleasure and honour to declare the 15th East AFRITAC
Steering Committee meeting officially open.
Thank you all and enjoy the rest of the evening.