njuguna ndung ’ u : innovative products in the banking industry in kenya address by prof njuguna ndung ’ u, governor of the central bank of kenya, at the kcb biashara banking launch, nairobi, 28 june 2007. * * * mrs. susan mudhune, chairman of kcb group directors of the board of kcb group, mr. martin oduor - otieno, ceo of the kcb group invited guests ladies and gentlemen : it is indeed a great honour for me to stand here during this launch of the kcb biashara banking. i feel personally privileged because i am also a long time customer of this bank and one that feels proud of innovative products in the banking industry. kcb has been a major player in the lives of kenyans and continues to play a pivotal role in the socio - economic development of our nation. kcb as a bank symbolizes the prosperity of indigenous enterprises and its ongoing success is a major boost to our confidence in the kenyan entrepreneurial spirit. i would like to congratulate the board and kcb team for the excellent performance that the bank has been reporting in recent years, a reflection that the bank continues to be a major financial market player in the country today. allow me also to commend the board and kcb team for the excellent corporate social responsibility agenda that you have been undertaking. i am informed that kcb has supported key community initiatives through donations to operation smile kenya, the kenya red cross society and ndakaini dam environmental conservation organization among other worthy causes. i urge you to continue with your sterling corporate citizenship efforts. it is now clear that the sme sector is the source of livelihood for majority of kenyans and there is need to nurture it so that it can grow into a huge sector in the kenyan economy. it is however widely acknowledged that the sector faces constraints in accessing financial services. it is in this light, that i must commend kcb for launching the kcb biashara banking product that targets this bedrock sector of the economy. i do hope that most entrepreneurs will take advantage of this product to grow their businesses to greater heights. ladies and gentlemen, as i had earlier alluded, the sme sector in kenya has been constrained in accessing credit. one of the key factors responsible for this constraint has been the lack of a “ credit history ” for these enterprises that can be used by banks in lending to them. the kcb on

, the central bank has, in consultation with the kenya bankers association, prepared relevant regulations, which will soon be gazetted in order to provide a framework for the licensing and operation of credit reference bureaus under the banking act. we will expect banks to make effective use of this mechanism as a credit analysis tool before extending any credit. 8. the central bank recognises the need to bring the legal framework for regulating the banking sector up to speed with international developments. in consultation with the ministry of finance and the kenya bankers association, the central has undertaken a comprehensive review of the banking act in order to align it to the best international practices and address some of the weaknesses which have been identified over time. we anticipate that once enacted, the legal framework will provide a conducive environment for a more robust banking sector. 9. allow me to conclude my remarks by appealing to banks to explore ways of enhancing the efficiency in service delivery. by enhancing efficiency banks are capable of offering more affordable banking services. this has the potential of drawing a larger number of kenyans to the financial system resulting in an expanded banking clientele. following the recent study on cost of banking services, the central bank will soon be launching the results of the survey and a sensitisation program to educate the public for more effective market discipline. we believe that these measures will encourage efficiency in the banking sector and resultant lowering of bank costs for the benefit of both the banks and the economy. 10. finally, let me extend my gratitude to the board of directors for inviting me to be with you on this auspicious occasion of the opening of the nakuru branch of fina bank. 11. it now gives me great pleasure and honour to declare the nakuru branch of fina bank officially open. thank you all for your attention.