banking products or development loans with longer tenors than the current term loans in commercial banks. supply of long term funds will support this line of development. the key target markets for the development banking products are the smes with huge growth potential. to further address the structural rigidities in pricing of credit, cbk will later in march 2010 launch a study report on collateral system and associated costs in kenya. the study, jointly commissioned by kba, cbk and fsd kenya, is aimed at establishing the current status on creation, perfection and enforcement of collateral in kenya. recommendations to overcoming any existing obstacles are expected to be detailed in the study report. ladies and gentlemen : as i draw to a close, i would like to assure you that the cbk in collaboration with the government and the market players will enhance its efforts in addressing other structural rigidities that contribute to market inefficiencies – for this reason, we would also like to hear from the market as well – to take stock of developments as well as other emerging constraints. ladies and gentlemen : cbk believes that the banking sector credit information sharing initiative should serve as a model for other credit and utilities providers. cbk will engage other players to ensure that we move with speed to rope in other financial and non financial credit providers. to this end the microfinance act was amended vide the finance act, 2009 to permit credit information sharing. inclusion of all credit providers and utility service providers will allow the full benefits of credit information sharing to permeate through the whole economy. ladies and gentlemen : it now remains for me to wish crb africa all the best as they commence their operations. we do believe that the licensing of crb africa and other crbs in future will go a long way in positively altering the kenyan banking sector landscape. we want to build strong institutions in the financial sector and information capital is one of the pillars of a strong institution. as i have emphasized, strong institutions define the appropriate incentives ( punishments ) that encourage prudent behavior. with these few remarks, ladies and gentlemen, it is now my honour and pleasure to declare crb africa officially launched. thank you.

purposes. early indications show that remittances may decline as disposable incomes decline in the countries experiencing the global recession. • tourism could be affected as tourists postpone or cancel visits abroad on account of difficult economic conditions and uncertain duration of the economic recession. however, recent data indicates that tourism has fully recovered in nairobi but mombasa and the lodges are still lagging. • kenyan exporters and importers use letters of credit issued by financial institutions abroad to facilitate trade between kenya and the rest of the world. since confidence is returning and global interbank lending has now resumed, this effect may be very minimal. • the shilling depreciated to the us dollar between september 1 and november 30, 2008 following pressure from the global financial crisis as foreign investors “ fled to safety ” while consolidating their finances to meet their obligations abroad. • the stock markets, and respective investors, recorded a sharp fall in the value of their investments and general financial net worth following the current global financial meltdown. stock markets fell by 21 percent in uganda, 24 percent in the south africa and 27 percent in kenya between september 1 and november 30. • kenya receives foreign assistance from overseas for official use to finance development projects ( e. g. roads, energy etc ), and through ngos to finance poverty reduction activities. this assistance could decline due to the crisis. mr. chairman : let me now turn to the heart of my address this evening on the impact of the financial crisis on the kenyan banking system. overall, i am pleased to note that the outlook for kenya ’ s financial sector remains stable in view of the prevailing levels of capitalization, sound risk management systems, strong asset quality and profitability that the banking sector is currently enjoying. specifically, the banking sector has enjoyed relatively strong performance during the last five years, supported by improved macroeconomic stability and legislative reforms which resulted in the implementation of revised prudential guidelines and risk management frameworks. these reforms have enabled the central bank to identify, monitor and control risks in a timely manner, while also strengthening corporate governance in banking institutions. the key highlights of the banking sector by end of november 2008 are : • deposits increased by 25 % from shs. 730 billion at november 2007 to shs. 911bn in 2008 as the sector continues to expand its outreach and aggressively market for new deposits. the asset base of the sector also increased by 33 % to stand at kshs. 1. 2 trillion. the asset growth was