njuguna ndung ’ u : financial inclusion through the agent banking model and credit reference bureaus remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, at the official opening of fina bank ’ s, ngong road branch, nairobi, 17 june 2010. * * * the chairman and board members ; group chief operating officer ; management and staff ; distinguished guests ; ladies and gentlemen : it gives me great pleasure to be with you today at the official opening of fina bank ’ s, ngong road branch. as the regulator for the banking sector, the central bank is pleased to be associated with the achievements of the banks we regulate, particularly where these developments lead to increased access to banking services for the kenyan public. this is what fina bank is doing this evening. it is evident that fina bank is focused on its programme of expansion and growth strategy, having started its operations as finance institution of africa in 1986 before converting to the present day fina bank in 1996. with the opening of this branch, the bank will have a network of 14 branches in the country. i also note that the bank has established its presence regionally by opening subsidiaries in uganda and rwanda. this is encouraging indeed. mr. chairman, let me take this opportunity to compliment the board, management and staff of fina bank for this great achievement. i note that as at april 2010, the bank commanded an impressive asset portfolio of ksh. 13. 5 billion and customer deposits of ksh. 11. 5 billion, while riding on a capital base of ksh. 1. 3 billion. the central bank is particularly encouraged by the bank ’ s leading role as a lender in the small and medium enterprise ( sme ) sector, a growth sector in kenya ’ s economy which has been described as the “ jewel ” of kenya ’ s economic growth. this is indeed important following from the budget proposals that created a revolving fund for sme – it may well be the best policy in our times to support the growth pole provided by smes. ladies and gentlemen, kenya ’ s growth picked up in the last quarter of 2009, extending into 2010 and on the back of good rainfall and a resurgence of tourism, we are optimistic that this positive trend will continue, and therefore forecast that the economy will post a 4 to 5 percent growth in 2010 on average. equally the banks have had a spectacular performance. for the period ended march 31, 2010, the

at financial institutions is surely also necessary in a number of cases, and this must start at the top. the culture around risk management and risk tolerance clearly is an important element of this. the practices that became pervasive throughout the first part of this century that contributed to the excesses need to change. what was considered an acceptable way of doing business will no longer suffice. given the role that the financial sector plays in the economy, there is a form of social contract between it and the general public. as i have mentioned earlier, the financial sector enjoys a level of support that is not present for other sectors of the economy, because of the crucial role it plays. but leverage implies financial institutions are more vulnerable. we need to consider what the safe degree of leverage is. that is a debate that is being had currently. the rate of profitability in the financial sector is also a debate society needs to be having. if financial institutions are perceived to be earning too high a rate of profitability, particularly if the institution is enjoying a degree of support from the public sector, that too will impede the restoration of trust. it will be a long road back to restore trust. without trust, the process of intermediation and credit provision will be greatly curtailed. in turn, this will impede the path to global economic recovery with costs to all. we have to lay out the road ahead, put down the road rules in the form of regulations and other curbs on the financial sector. but then the journey still needs to be taken. there are no short cuts. bis central bankers ’ speeches