include : financial infrastructure : banks, insurance, brokerage firms, outlets, agents etc ; adequate human resource skills and a flexible labour market ; a transparent and effective regulatory framework ; a critical mass of vertically integrated financial institutions in one location operating in a conducive business environment ; and observing rules of the game. as nakuru aspires to become a vibrant financial town, you will need to assess whether the prerequisites indicated above exist and if not what steps need to be taken to put them in place. all the prerequisites can only be put in place with a unity of purpose among all stakeholders. ladies and gentlemen : the linkage of any form of business and banking need not be overemphasized. business and banking complement each other. the banks ’ role of financial intermediation takes place through various forms. as banks allocate resources ( mainly deposits ), they focus on productive sectors of the economy whose potential to default is minimal. this demonstrates the fact that economic growth can only be achieved through efficient resource mobilization and allocation in the economy. banks are bestowed with the ability to undertake this function. they collate savings and deposits from micro - savers to investors. they allow access to finance where their customers accumulate capital through savings and affordable credit. however, resource mobilization and allocation is not an end in themselves. economic growth can only be realised if businesses efficiently utilise the resource towards the desired results. the financial sector is therefore in place to encourage a cycle of savings and investment. credit risks are declining as witnessed by declining non - performing loans in banks. we need to take advantage of this. over the last ten years, the trend has drastically changed with a continued drop in the level of non - performing loans from as high as 38 percent of gross advances in 2002 to 7 percent as at march 2010. this is an indication of improved resource management in kenyan businesses and perhaps the efficiency of screening and monitoring the role the banks have invested in. ladies and gentlemen : over the last 5 years, kenya has witnessed significant growth in the outreach of kenyan banks. the number of bank branches have increased from 534 in 2005 to 996 in 2009 ; a growth of 87 percent. the increase is mainly attributed to intense competition among banks and their desire to venture into new territories which are deemed unsaturated. banks have also seen the benefit of banking the unbanked and removing barriers to entry. nakuru has greatly benefited from this expansion. over the

been made. most of our active members have been meeting a number of the macroeconomic convergence targets, as we continue harmonization and co - ordination of macroeconomic and monetary policies. we recently embarked on stage iii ( year 2009 – 2012 ) of the programme, whose successful implementation and assessment of macroeconomic performance will form a basis for the establishment of a continent wide common central bank. in addition hon. minister, the assembly of governors are working on a common strategy with regard to the establishment of the african central bank ( acb ) as well as advising on the formation of both the african investment bank ( aib ) and the african monetary fund ( amf ). the realization of these institutions will bring us closer to a continent wide monetary union. hon. minister and fellow governors, benefits of integration have been evident across the globe, including securing access to larger markets, enhancing trade flows and in the process attracting the much needed foreign direct investments, lowering trade costs among neighbours, leveraging or locking in domestic reforms, increasing bargaining power and political cohesion among others. notwithstanding these benefits, regional groupings in africa have tended to give less emphasis to monetary integration. under the amcp, the eastern africa sub - region central banks evaluate each other annually to ensure convergence in policies as we pursue further monetary integration. this meeting, hon. minister, will therefore consider the progress on the implementation of the african monetary co - operation programme ( amcp ) by the eastern africa sub - region countries in 2009 ; consider macroeconomic performance against the amcp targets and the status of execution of the decisions of the 8th meeting of governors of the sub - region held in moroni, comoros. my fellow central bank governors, ladies and gentlemen, with these few remarks it is now my humble duty to invite the hon. deputy prime minister and minister for finance to address and officially open this meeting. welcome hon. minister.