njuguna ndung ’ u : kenya ’ s ksh. 18. 5 billion infrastructure bond address by prof njuguna ndung ’ u, governor of the central bank of kenya, during the launch of the ksh 18. 5 billion infrastructure bond issue, nairobi, 28 january 2009. * 1. 0. * * background since 2001, the government pursued a deliberate policy action to restructure domestic debt, with a view to developing a vibrant bond market for generating long term finance. the success in lengthening the maturity profile of debt instrument has been phenomenon. several measures were instituted to facilitate development of a robust bond market ( a ) in 2003, the government lowered the cash ratio for commercial banks to release liquidity held with a view to reducing interest rates. ( b ) the government also streamlined its domestic borrowing cash plan in favour of bonds. as a result, the volume of treasury bonds rose from ksh. 80 billion in june 2001 to ksh. 318 billion by end december 2008. the proportion of long term debt to total domestic debt was reversed from 70 : 30 and now stands on average at 70 : 30. but what is needed now are bonds specific to projects of a developmental nature. infrastructure financing is one such target. the government organized the first ever infrastructure bond conference on october 27 - 28, 2008 at the kenya school of monetary studies. the ambition was to launch a series of infrastructural bonds to finance targeted projects and emulate other countries like : south africa, ghana, botswana, nigeria, malaysia, and singapore, among others have used capital markets to finance infrastructure projects. it is against this background that the government is launching this first infrastructure bond as a starting point. 2. 0. projects / sectors to be funded kenya aspires to be firmly interconnected through sophisticated network of roads, railways, ports, airports, and also provide water and sanitation facilities, and telecommunications as a key pillar of economic development in the vision 2030 blueprint. but the challenge is the huge capital outlay required, leading to the initiative we are starting today. this recognition of infrastructure provision has been recognized as an inhibition in competitive production due to heavy transaction costs. the targeted projects are well documented in the prospectus. we may in future allow a monitoring process for these projects to completion. 3. 0. the features of this infrastructure bond given the long term nature of the projects, the infrastructure bond will be of 12 years to maturity with face value of

interest rates — why this time will be different dr. patrick njoroge the battle for affordable credit went into high gear with the introduction of interest rate caps on september 14, 2016. this followed long - standing concerns about the high interest rates charged by commercial banks, their poor customer service and perceived insensitivity. three years later, the caps have been repealed and the verdict is clear — there are winners and losers. those that had borrowed at high rates ( above cbr + 4 percent ) had a bonanza. however, for the majority of potential borrowers and the most vulnerable, bank credit was unavailable. micro small and medium - size enterprises ( msmes ) were shut out and had to contend with shylocks at highly unfavorable terms. certainly this did not engender shared prosperity among kenyans. but the lingering question is whether banks will now roll back to their old ways, or will they strive to build a banking sector that works for and with all kenyans. will they react with courage and hope for the future, or roll back to mistrust and caution? the central bank of kenya ( cbk ) has set the pace by defining a clear vision of a banking sector that is responsible, disciplined and aligned to customers ’ needs. four pillars underpin this vision : risk - based credit pricing, transparency, customer centricity, and entrenching an ethical culture in banks. pricing — loans should be priced responsibly based on the customer ’ s risk profile and all positive and negative information from credit reference bureaus ( crbs ). the credit information sharing ( cis ) mechanism has recently been improved and work is ongoing to enhance it further, e. g., increasing the sources of information, enhancing the frequency and integrity of the data reported to crbs, and training of bank staff. transparency — banks need to fully and widely disclose the pricing ( all charges and fees ) of their products. to this end, the cost of credit website and a mobile app that enable customers to “ window shop ” for personal loans and mortgages were launched in 2017. further improvements are needed to incorporate more products and improve the overall customer experience. customer centricity — banks need to be aligned to the needs of their customers, including tailoring products that best serve customers ’ needs and resolving swiftly customers ’ complaints. for instance, banks recently showcased products that were tailored to the unique conditions of msmes. ethical culture — customers have perceived the high