informal remittances channels to migrate to the use of this reliable, albeit convenient platform to send money home. ladies and gentlemen, in view of the important role of the remittances in our economy, an overriding policy objective for the central bank is to lower costs through competition facilitated by the entry of international money transfer services providers. this will enhance service delivery and enable users of such services obtain competitive remittances rates at substantially reduced unit costs. in this regard, central bank has issued and continues to issue permits to all applicants seeking to enter the international money transfer services market under the legal framework spelt out in the cbk act section 33 a, subject to meeting the set conditions. the safaricom mobile based international money transfer service has been granted with a permit pursuant to this policy objective. at this juncture, i would like to reiterate that while the central bank welcomes innovative products, it evaluates all such products to ensure safety and efficiency concerns are adequately addressed. the central bank has the necessary capacity to properly evaluate and appraise technology driven financial services to ensure they meet international standards. services that involve partnerships with commercial banks have to adhere to the existing prudential and statutory banking sector requirements. we will work closely with commercial banks and other service providers to increase awareness and enlarge the frontier of services. the central bank is also cognizant of the fact that international remittances platforms could be used as money laundering channels. part of our evaluation therefore involves subjecting applicants to a through scrutiny of their aml compliances programmes not only in kenya, but also in the sending jurisdictions. in this regard record keeping and “ kyc ” requirements must be adhered to as part of the approval conditionality. ladies and gentlemen, the subject of migrant worker remittances and their socio economic significance both for the sending and receiving countries has become a popular topic for governments, payment systems experts and other public policy makers. international remittances bring with them substantial welfare gains to the receiving countries and have huge developmental potential. the world bank estimates that recorded remittances by some 200 million migrants from developing countries reached us $ 283 billion in 2008, up from us $ 265 billion in 2007, while unrecorded flows through informal channels could even be higher. as a share of gdp, remittances constitute about 2 % of gdp. these numbers are almost equivalent to the foreign direct investment ( fdi ) flows, and may

njuguna ndung ’ u : regulation and supervision of the forex bureau industry in kenya talking notes of prof njuguna ndung ’ u, governor of the central bank of kenya, for the meeting with the kenya forex bureaus association ( kfba ), nairobi, 22 august 2007. * * * the chairman, kfba ; distinguished guests ; ladies and gentlemen ; 1. let me take this opportunity to invite you all to the cbk during this very important occasion to meet the forex bureau industry representatives as part of our partnership and to discuss and share experiences on industry matters. 2. before i proceed, let me thank the association for honouring our invitation and my staff for the presentation, which has clearly laid down the industry landscape and set the stage for our meeting. i hope this does form a platform through which we share experiences as well as challenges. 3. ladies and gentlemen, first and foremost, let me emphasize the role of regulation and supervision of the forex bureaus in kenya, which aims to : • develop a strong, stable and viable forex bureau industry ; • inculcate good corporate governance practices in forex bureaus ; • ensure there is adequate internal control and management information systems in forex bureaus ; and • ensure forex bureaus to comply with the act and guidelines. all these factors enhance healthy developments for any firm in business. but since bureaus are special, we shall continue to attach a lot of importance to compliance and enforce the act and guidelines including suspension and revocation of licences. 4. however, we expect forex bureaus to cooperate and partner with the central bank in the development of the forex bureau industry. 5. let me now turn to specific matters that touches on certain specific issues on the industry. these include : a ) moratorium : as you are aware, the central bank had in the past imposed a moratorium on licensing new forex bureaus. this was done in order to : • allow newly established forex bureau industry to grow and individual bureaus to consolidate • ensure market discipline in the foreign exchange market by developing appropriate frameworks for regulation and supervision ; and • enforce government concerns on money laundering and related financial crimes. after a careful assessment, the central bank has lifted the moratorium on licensing of new forex bureaus including those to be located in the nairobi and mombasa central business districts. b ) industry image : the continued existence of the moratorium can