njuguna ndung ’ u : financial inclusion through the agent banking model and credit reference bureaus remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, at the official opening of fina bank ’ s, ngong road branch, nairobi, 17 june 2010. * * * the chairman and board members ; group chief operating officer ; management and staff ; distinguished guests ; ladies and gentlemen : it gives me great pleasure to be with you today at the official opening of fina bank ’ s, ngong road branch. as the regulator for the banking sector, the central bank is pleased to be associated with the achievements of the banks we regulate, particularly where these developments lead to increased access to banking services for the kenyan public. this is what fina bank is doing this evening. it is evident that fina bank is focused on its programme of expansion and growth strategy, having started its operations as finance institution of africa in 1986 before converting to the present day fina bank in 1996. with the opening of this branch, the bank will have a network of 14 branches in the country. i also note that the bank has established its presence regionally by opening subsidiaries in uganda and rwanda. this is encouraging indeed. mr. chairman, let me take this opportunity to compliment the board, management and staff of fina bank for this great achievement. i note that as at april 2010, the bank commanded an impressive asset portfolio of ksh. 13. 5 billion and customer deposits of ksh. 11. 5 billion, while riding on a capital base of ksh. 1. 3 billion. the central bank is particularly encouraged by the bank ’ s leading role as a lender in the small and medium enterprise ( sme ) sector, a growth sector in kenya ’ s economy which has been described as the “ jewel ” of kenya ’ s economic growth. this is indeed important following from the budget proposals that created a revolving fund for sme – it may well be the best policy in our times to support the growth pole provided by smes. ladies and gentlemen, kenya ’ s growth picked up in the last quarter of 2009, extending into 2010 and on the back of good rainfall and a resurgence of tourism, we are optimistic that this positive trend will continue, and therefore forecast that the economy will post a 4 to 5 percent growth in 2010 on average. equally the banks have had a spectacular performance. for the period ended march 31, 2010, the

financial services. 4 ) credit reference bureaus ( crbs ) : through licensing of credit reference bureaus, the cbk has enabled credit providers to collect, collate, analyse and disseminate credit information. credit information sharing provides an opportunity for individuals and businesses to rely on bis central bankers ’ speeches their credit history ( information capital ) to support the process of collateralization and even change the collateral technology in the country. individuals will also be able to use their positive credit history to negotiate for better terms and conditions from their banks. on the other hand, banks will benefit from the mechanism since it will address the problem of information asymmetry and by extension the problem of non - performing loans which has in the past threatened the stability of the banking sector. the traditional challenges of the moral hazard and adverse selection can hinder financial sector growth. as a result, credit appraisal by bank staff will greatly benefit from credit information sharing. what staff need to do is appreciate how the mechanism operates, its benefits and embrace it as a tool to enhance relationship with their clients. 5 ) lowering the cost of doing business through currency centres : cbk believes that through cost reduction, banks will be able to extend credit to the productive sectors of the economy at reasonably cheaper costs. consequently, cbk has in partnership with the kenya bankers association, established currency centers in towns outside the central bank branch networks. 6 ) licensing deposit taking microfinance institutions ( dtms ) : the central bank is also actively pursuing a policy of licensing dtms as a means of reaching out to all segments of the market. dtms are free to choose to be nationwide or community based. 7 ) capacity building through hr training and development : cbk assists industry players empower their employees to embrace strategies aimed at making the banking sector safe, efficient, effective and all inclusive. the strategic initiatives include : a ) playing a leading role in the human resources sub - committee of the monetary affairs committee of east african central banks – through this forum partner central banks are addressing emerging hr issues by revising the frameworks governing hr policies and strategies such as recruitment, retention policy and succession plans among others, in line with international best practice. b ) facilitating capacity building through the kenya school of monetary studies ( ksms ) – the ksms was established to provide capacity building programmes for the financial sector in kenya and the region and i am happy to note that the school has offered relevant programmes in banking and it at certificate and diploma levels for over