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

mr. greenspan gives a testimony on the global financial system testimony of the chairman of the board of governors of the us federal reserve system, mr. alan greenspan, before the subcommittee on foreign operations of the committee on appropriations of the us senate on 3 / 3 / 98. the global financial system has been evolving rapidly in recent years. new technology has radically reduced the costs of borrowing and lending across traditional national borders, facilitating the development of new instruments and drawing in new players. information is transmitted instantaneously around the world, and huge shifts in the supply and demand for funds naturally follow, resulting in a massive increase in capital flows. this burgeoning global system has been demonstrated to be a highly efficient structure that has significantly facilitated cross - border trade in goods and services and, accordingly, has made a substantial contribution to standards of living worldwide. its efficiency exposes and punishes underlying economic imprudence swiftly and decisively. regrettably, it also appears to have facilitated the transmission of financial disturbances far more effectively than ever before. three years ago, the mexican crisis was the first such episode associated with our new high - tech international financial system. the current asian crisis is the second. we do not as yet fully understand the new system ’ s dynamics. we are learning fast, and need to update and modify our institutions and practices to reduce the risks inherent in the new regime. meanwhile, we have to confront the current crisis with the institutions and techniques we have. many argue that the current crisis should be allowed to run its course without support from the international monetary fund or the bilateral financial backing of other nations. they assert that allowing this crisis to play out, while doubtless having additional negative effects on growth in asia, and engendering greater spill - overs onto the rest of the world, is not likely to have a large or lasting impact on the united states and the world economy. they may well be correct in their judgment. there is, however, a small but not negligible probability that the upset in east asia could have unexpectedly large negative effects on japan, latin america, and eastern and central europe that, in turn, could have repercussions elsewhere, including the united states. thus, while the probability of such an outcome may be small, its consequences, in my judgment, should not be left solely to chance. we have observed that global financial markets, as currently organized, do not always achieve an appropriate equilibrium, or at least require time to stabilize.