njuguna ndung ’ u : dissemination of the results of the kenya financial diaries, 2014. keynote address by professor njuguna ndung ’ u, governor of the central bank of kenya, at the dissemination of the kenya financial diaries, nairobi, 12 august 2014. * * * distinguished guest ; ladies and gentlemen : it is my honour and pleasure to join you during this breakfast event to disseminate the results of the kenya financial diaries, 2014. this is a commendable and timely study by the financial sector deepening kenya aimed at understanding behaviour of the consumers of financial services in the country. by focusing on low income peoples ’ lives the findings of the diaries will help policy makers, industry players, researchers and others to better understand the challenges faced by low - income groups and recognise new opportunities to develop appropriate interventions and financial service options that better meet their needs. as you will recall, towards the end of last year, we launched the results of the finaccess national survey, 2013, and early this year, we launched the finaccess geographic information system ( gis ) mapping of all financial access points results carried out by the financial access partnership ( fap ) that include both central bank of kenya ( cbk ) and financial sector deepening ( fsd ), kenya. i am therefore happy to see that fsd kenya has taken the initiative to also commission the kenya financial diaries, 2014. this is very complementary to the other regular studies that we have undertaken together, like finaccess surveys. it will help the researchers on financial sector issues more deeply understand what is behind the trends that we see in finaccess surveys and uncover new opportunities to push the financial inclusion frontier in kenya further. the information is equally critical for informed decisions by consumers of financial services. ladies and gentlemen : in line with vision 2030, we have transformed the financial sector into a dynamic and growth pulling sector. but the goals set by vision 2030 have not yet been achieved, although we are confident to achieve them. these goals will be achieved by addressing the vision ’ s three core objectives, namely : enhancing financial system stability, efficiency, and expanding financial access to all kenyans. the financial diaries give us an opportunity to consider these issues of stability, efficiency and inclusion in a very different light, through the eyes of low income kenyans, and in many ways it shows us that those goals for financial sector are really quite intertwined. financial inclusion is important to

how the credit facilities that schools extend to parents over the course of a school year enables poor parents stretch their budgets and afford this major investment in their children ’ s future. this also enhances the family capacity for the future. indeed, financial services are making themselves present at every turn for these families. finance is not a luxury, but absolutely a necessity in poor people ’ s lives, just as surely as it is for everyone. that is why when we look at the range of needs, we can focus on the pricing to make it sustainable and enlarge the market. • third, poor kenyans are in fact saving, but they are choosing to hold most of that savings in informal financial devices e. g. rotating group saving and lending. few other studies are able to tell us about money that kenyans are holding in informal financial devices, and one of the great values of the financial diaries is that it gives us this more comprehensive portfolio view especially as regards the mix of savings in banks and durable goods. as you know, the central bank is very concerned about savings. we know that achieving growth as a nation requires that deposits be available for productive investment. we expected that increasing the savings rate here in kenya is about getting our people to save more. but, we also know that this will be enhanced after a particular threshold of income is achieved and surpassed. the financial diaries report suggest that we may need to explore that more. perhaps in addition to saving more, we also need to save differently. in the diaries households, only 9 % of financial assets are being held in the formal financial sector and the balance in the informal segment. the authors of the report also point out that getting this kind of informal to formal shift is going to be difficult when savers want to see their money working. one advantage of the informal financial sector, that is, the non - organised non - institutional sector and in saccos and some mfis is that savings are more visibly deployed among other group members and in one ’ s own self. it is visibly doing a job, and that can be harder to see when returns on savings are low and the investments those savings finance are not immediately visible. i have no easy answer about how kenya ’ s financial sector can address this challenge, but it is an important insight that we need to understand better. how can bis central bankers ’ speeches we show people that their savings in the formal financial sector are in fact working? how can we improve the proportion of saving in