njuguna ndung ’ u : agent banking remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, at the official opening of the workshop on agent banking, nairobi, 14 january 2010. * * * chief executives of commercial banks here present ; distinguished guests ; colleagues ; ladies and gentlemen : allow me at the outset to thank you for accepting our invitation to attend this workshop. it is indeed important that this morning we are addressing the issue of agent banking, a concept we are keen to see take root innovatively in kenya. the central bank has convened this workshop for three critical objectives : • the first objective is to demystify this new banking model and show how it works ; • secondly, to showcase how it has worked successfully in other countries as a platform for financial reach, inclusion and financial deepening ; • finally, to build consensus amongst market players on how agent banking can work in kenya supported by regulatory framework. as you are aware, the finance act, 2009 that became operational at the beginning of this month has amended the banking act to enable use of third party agents by banks. banks will therefore be able to leverage on additional cost effective distribution channels to offer financial services. this initiative is informed by the need to leapfrog access to financial services in kenya. the national financial access survey of 2009 shows that 32 % of kenya ’ s bankable population remains totally outside the orbit of financial services and many more being served by the informal financial system. ladies and gentlemen : vision 2030 is premised on a safe, efficient and inclusive financial system where savings and investment rates will more than double. the financial sector is expected to play a pivotal role in mobilizing the substantial resources required to finance the envisaged flagship projects. we must therefore explore and implement innovative models that will deepen kenya ’ s financial sector to support savings and investment growth. the central bank of kenya continues to support innovations that will broaden financial inclusion for the majority of kenyans. in doing so, we will need to focus on safeguards to ensure that the integrity and safety of the financial sector is not threatened. but above all, the cost of financial services should decline to encourage financial inclusion and reach at all corners of the country. it is appropriate at this stage to highlight the key steps that the central bank has undertaken up to now with regard to agent banking : • initially, extensive reviews of the knowledge base in this area were undertaken to enhance our understanding of this

export - led growth model, hence the need to look for new markets just as emerging markets have done to move away from traditional market enclaves. bis central bankers ’ speeches the policy issue is then the determination of the appropriate role of exchange rate policy, with a view to facilitating an appropriate structural adjustment process that promotes long - run and sustainable growth. the theme of today ’ s seminar is timely as kenya ’ s economy readies for take - off. policymakers need to find a flight path through the lingering risks. ladies and gentlemen, several papers that link monetary policy actions and the exchange rate policy have been lined up for presentation today. these include research that looks into factors that explain exchange rate movements, the extent of real exchange rate misalignment and the relationship between the real exchange rate and exports. we will also get presentations on papers that develop indices that can serve as an early warning system for currency and macro - economic crises. 4 as kenya aspires to be the regional financial hub ; and is indeed currently regarded as so, one of the pillars for maintaining this regional leadership is also being on the frontier of research information for the financial sector. a well known fact is that a financial boom can trigger an overvaluation of a currency if adjustments do not take place over time. the kenya school of monetary studies is well placed to provide this leadership and it is challenged to do so. therefore, these types of seminars should be the norm on an annual basis. but filtering policy conclusions that can be used for policy direction remain the most important objective. as i conclude, i thank the participants present, including those that have travelled from far for this seminar. i hope the handful of issues addressed in the contributions today will provide the basis for a rewarding discussion. once gain – you are all very welcome! it is my pleasure to declare this workshop officially opened. thank you. bis central bankers ’ speeches