banking system for money laundering purposes. a survey released early this year indicated that 38 % of kenyans lack access to financial services. this population has been kept away from banks due to fear of costs and barriers to entry. once the income side is solved through economic growth and an enabling legal and regulatory framework for microfinance institutions is created, it is our strong belief that this will go a long way in pushing forward the “ kenyan access to financial services frontier ”. as you will recall, the microfinance act was assented to in december 2006 and the regulations to operationalise the act are currently under review by the attorney general. once gazetted, the regulations will provide the central bank with a platform to license and oversee microfinance institutions. this means more players and more flexibility and competitiveness within the financial sector. ladies and gentlemen : it would be remiss of me not to address the current “ buzz word ” in supervisory circles, “ basel ii ”. as you are aware, the basel committee issued the basel ii capital framework in june 2004. basel ii was ready for implementation among the committee ’ s 13 member countries from the end of 2006. it is, however, widely acknowledged that basel ii will only be implemented in emerging economies such as kenya at a later date as they put the requisite supervisory infrastructure in place. this position was indeed adopted by the central banks of kenya, uganda and tanzania in 2005. since then, we have focused on putting in place the requisite supervisory infrastructure as i have alluded to in my remarks this evening. i am delighted that we have made substantial progress towards this end. accordingly, we commenced in september, a consultative process with the banking sector that will lead to the formulation of a policy position on implementation of basel ii in kenya in the course of 2008. the financial sector will be facilitated to play a pivotal role in achieving these objectives through reforms aimed at achieving : • stability in the sector to ensure that all banks and financial institutions taking deposits safely handle the public ’ s savings and ensure that the chances of financial crises are minimized. • greater efficiency in the delivery of financial services to ensure that the costs of services become increasingly affordable and that the range and quality of services better caters to the needs of both savers and investing businesses. • improved access to financial services and products for a much larger population of kenyans. let me reiterate that a consultative approach will be followed to ensure that the best interests of the banking sector and national

fact that enhanced reliability of these new technologies is equally important. the above developments notwithstanding, central bank recognizes the fact that a sound legal framework plays a crucial role in the proper functioning of payment and settlement systems and the financial sector as a whole. to this end, a proposed national payment systems bill, 2007 has been forwarded to the attorney general ’ s office where it is undergoing final drafting to reinforce the existing general legal infrastructure that affects payment systems. the law will provide a legislative framework for governing the operations of national payment systems and payment instruments in kenya when enacted. it is important that legislation takes place when the infrastructure is in place and the players are prepared. it is our hope that this will be realized by end of the first quarter of next year. in closing, let me underline the central bank ’ s commitment to partnership with the banking industry in facilitating the development of a sound banking system with highly trained professionals that would improve the standards and mobilize the substantial resources required for our country ’ s development. finally, ladies and gentlemen, as we head towards the festive season, i take this opportunity to wish each and every one of you a merry christmas, a peaceful electioneering period and a prosperous new year. thank you.