njuguna ndung ’ u : initiatives, developments and achievements of the kenya government securities market remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, at the launch of the ftse - nse kenya government bonds index, nairobi, 3 october 2012. * * * the chairman of the nairobi securities exchange ( nse ) ; chief executive, nse, mr peter mwangi ; officials of the ftse group ; capital and financial market executives ; members of the media ; ladies and gentlemen : at the outset let me thank the nairobi securities exchange chief executive for inviting me to participate in this auspicious moment of the launch of the ftse - nse kenya government bonds index. this achievement is indeed critical for the development of a robust domestic financial market in kenya. today ’ s event comes at a time when we as market players take pride in the success of our efforts in spearheading market development. this collaboration among market players has been instrumental in developing one of the fastest growing bond markets in africa as the kenyan bond market is ranked among the top in africa. ladies and gentlemen : let me take a few minutes to make some remarks on the initiatives and developments that have underlined the achievements of kenya government securities market. over the last one decade, the central bank of kenya in liaison with stakeholders in the financial sector has contributed significantly to the following successes : 1. longer maturity profile of domestic debt instruments : average maturity profile of government securities rose from 8 months or ratio of 76 : 24 in treasury bills to bonds in june 2001 to 5 years 5 months or ratio 20 : 80 currently. with a well - functioning secondary bond market in place, the government no longer faces rollover risks associated with short term debt instruments. 2. benchmark bonds implementation : successful implementation of treasury bonds benchmarks and reopening to increase their liquidity since april 2009 was a critical step towards addressing the bond market fragmentation problem and in the development of a reliable yield curve in our market. about 16 benchmark bonds have so far been reopened bringing into the market more than ksh. 138 billion and providing critical financing for the national recurrent and development budget as per government ’ s fiscal policy. 3. project - specific ( infrastructure ) bonds – the government of kenya took a bold step in february 2009 to issue the first project / sector specific bond with an aim to fund key infrastructure projects and set pace for public, private as well as supranational agencies

- analysed. however, this conference brings together creative minds that can innovate new affordable products designed to suit the needs of the customers at the bottom of the pyramid. this would also require financial institutions to align business models to support, especially, small and medium enterprises ( sme ) lending. further, lower cost of credit can also be achieved through continued collaborative efforts between actors in the sector to develop innovative distribution channels. it is therefore paramount that financial institutions embrace financial innovation in order to enhance coverage of financial services and reduce transaction costs, particularly through electronic and mobile money transfers. bis central bankers ’ speeches with regard to innovation, i would like to note that cis is one of the most inventive mechanisms in kenya that has contributed immensely to the development of the financial sector. despite being a young concept, the success achieved by cis is remarkable. this has been duly recognized in kenya ’ s enhanced rankings in the world bank doing business report, 2016. in the ease of getting credit indicator, kenya emerged position 28 globally. this is a significant improvement from position 118 in 2015, largely attributed to the developments in the cis environment such as the sharing of full file data by both commercial and microfinance banks. however, ladies and gentlemen, despite this remarkable progress, we have three critical concerns that i present as challenges to the credit market regarding cis. first, it is said that lenders are quick to inform consumers when their credit profile is poor, but are mute when the score is good. consequently, borrowers only know about the credit bureau when there is a problem. this needs to change. banks in kenya have been sharing positive data for two years now, and therefore must begin to inform and reward their low risk customers with better terms. secondly, lenders must be willing to invest in efforts to ensure highest standards of data quality. this is important because a borrower ’ s credit report is a score - card on the character of individuals and corporates. it is imperative that every effort is made to provide accurate and updated information on each of their customers, without regard to status or social standing. thirdly, there is need to address consumer complaints associated with credit information as promptly as possible. where these issues escalate to disputes, lenders should explore alternative dispute resolution mechanisms. i am confident that the deliberations regarding alternative dispute resolution, which are part of this conference, will provide insights into the critical aspects of consumer protection that are needed to ensure credibility of the whole mechanism.