njuguna s ndung ’ u : collaboration among domestic financial sector regulators opening remarks by prof njuguna s ndung ’ u, governor of the central bank of kenya, at the 3rd joint cma / cbk / rba / ira board members seminar, mombasa, 25 march 2010. * * * board members ; colleagues ; ladies and gentlemen : 1. i am delighted and honoured to be here this evening at the commencement of this important retreat. 2. to start with, let me extend my congratulations to the board members and management of insurance regulatory authority ( ira ) for hosting the 3rd joint retreat for board members of domestic financial sector regulators. 3. allow me to take this opportunity and touch briefly on the achievements of cbk since we last met in naivasha in july 2009. 4. the monetary policy committee ( mpc ) for instance, has since september 2009 been implementing decisions aimed at signaling to the market the need to expand credit to the private sector at affordable interest rates. in an effort to make credit cost effective we have several policy initiatives : agent banking : central bank has been pursuing a policy of broadening financial inclusion to the majority of kenyans at lower costs through innovations. to this end, the finance act, 2009 amended the banking act to enable banks to use third party agents. this will enable them to leverage on additional cost effective distribution channels to offer financial services. similarly, the model will enable banks to enhance delivery of financial services by use of third parties that include some of the entities that are regulated by the other domestic regulators. credit reference bureau : to improve the living standards of the majority of kenyans, higher economic growth is required. economic growth cannot be achieved without enhanced private sector lending. in this regard and to ensure access to credit at affordable rates, a robust credit information mechanism is key. to this end, cbk licensed the first ever credit reference bureau which has already commenced operations. it is our hope that this move will positively alter the kenyan banking sector landscape and facilitate the lowering of the cost of credit. it is our belief that the experience from the banking sector credit information sharing initiative will sooner rather than later be expanded to include other lenders and utility service providers to hasten the elimination of information asymmetry and hence promote efficiency in the market. cost of collateral : institutions have on several occasions cited the cost of collateral as one of the major components contributing to high interest rates. to gain an understanding of the underlying factors in the

stability, the continuous growth of the position of liquidity and capitalism, considerably above the level required by the central bank, the fund's introduction and active participation in this sector have strongly influenced the continuation of significant increase and improvement of the aforementioned lending standards. the satisfactory stability of the banking sector is also reflected by the good quality of the loan portfolio. the low level of non - performing loans marked a further decline to 2. 6 % in march 2019. this represents the lowest level so far, and continues to list kosovo as the country with the lowest rate of non - performing loans in the region. despite the hitherto success, the fund will face challenges in achieving future objectives. the good quality of loans guaranteed by the fund, adequate operating tariff, effective risk management mechanisms, operational independence, and financial stability are essential for the functioning and development of the fund. these can be achieved by proper corporate governance which is integrated into the institutional framework of the fund. the board of directors and management shall ensure that such a framework is prudent and operates in accordance with the law and the best internationally accepted standards. it is very important for the fund to increase its activity since the fund's guarantee potential is much higher than what it is currently being utilized. the agreement between the european investment fund ( cosme programme ) and the fund enables the reguaranteeing of the portfolio up to eur 45 million for a two - year period to a credible institution such as the european investment fund which will have a positive impact on increasing access to financing for micro, small and medium - sized enterprises. these benefits would enable the fund to reduce the fee for loans re - guaranteed by the cosme programme. the cbk will continue to ensure the financial stability it currently enjoys. the role of banks in particular, and of other financial institutions in general, is very important and there is still room for this role to be further advanced in order to increase its impact on the development of kosovo's economy and further development of the banking system itself. above all, it is a collective obligation to contribute to the development of a financially stable kosovo credit guarantee fund so that it serves to the development of micro, small and medium - sized enterprises. finally, i would like to conclude my speech with praises on the excellent work done so far in the functioning of the fund, and looking forward to maximum inter - institutional engagement for advancing this fund so that it further increases financial intermediation in kosovo.