central bank of kenya euromoney kenya conference financial inclusion 2. 0 : expanding kenya ’ s digital financial ecosystem tuesday 9th may 2017 welcoming remarks by dr. patrick njoroge governor of the central bank of kenya good morning! 1. it is my pleasure to warmly welcome all delegates to this inaugural euromoney kenya conference. i am particularly pleased to extend a special welcome to those delegates who are visiting our country for the first time. i hope you will enjoy the excellent kenyan hospitality, and that you will find time to visit our national heritage sites within the city before you return to your respective countries. 2. i wish to salute the co - hosts of the conference — euromoney conferences, and the kenya bankers association. i also wish to acknowledge the other institutions that have sponsored and supported the conference : the co - sponsor, kenya commercial bank ; the africa regional partner, african development bank group ; and the supporting organizations, oracle and integrated payment services ltd. ( ipsl ). 3. the theme of this conference “ financial inclusion 2. 0 : expanding kenya ’ s digital financial ecosystem ” provides an excellent opportunity for the policymakers, thought leaders, bankers, investors, and entrepreneurs, all gathered here today as distinguished speakers and participants, to deliberate on the economic environment in africa and the outlook for the financial sector. the sessions will also offer insights on the strategic challenges and opportunities facing digital finance in the region. 4. as is well recognized, kenya has leveraged mobile phone technology and made remarkable strides in financial inclusion. a decade ago, kenya was characterized by high poverty incidences and high levels of financial exclusion. with the adoption of mobile financial services and agency banking, among other innovations, financial access has increased from 26. 7 percent in 2006 to 75. 3 percent in 2016. while this is remarkable, the question at hand remains how to expand the digital financial services ecosystem beyond basic money transfer, savings, and micro - credit. we are equally aware that there are still barriers to financial access that hinder 17. 4 percent of population from accessing the ( formal or informal ) financial system. further, we very much recognize that financial access does not necessarily translate to better living standards — but a journey of a thousand miles starts with a single step. 5. for kenya, current innovations have mainly addressed the issue of convenience of financial products and services to the general public. as a regulator in the financial sector, our focus now is to enhance the usage of the existing financial innovations as well as

a case for expanding access of quality and affordable financial services and products to majority of the population. access to finance will encourage savings and credit. this will effect savings / investments cycle, allowing for capital accumulation and asset building which enables the poor to escape poverty. safe havens for savings by the poor reduce their vulnerability to periodic economic and social shocks. access to finance will expand the level of participants and so lower unit costs. ladies and gentlemen : our efforts to ensure expanded financial access have been measured by three national financial access surveys for 2006, 2009 and 2013. these surveys have clearly demonstrated that kenya ’ s financial landscape has considerably changed over the period 2006 – 2013. the financial system is now offering a wider range of financial services and products to more kenyans, covering a wider geographical spread, and even going beyond kenyan borders. this has strengthened the banks and created a wider market. these developments are a bis central bankers ’ speeches testimony to the strength and vibrancy of our banking sector it has contributed to kenya ’ s financial development. • enhancing the efficiency of the financial system has an immediate impact on the welfare of its customers and the wider real economy through the consequent reduction of costs of financial services. competition is essential in ensuring that financial institutions are incentivised to invest in improving productivity, efficiency and cost effectiveness. the cbk has acted to encourage greater transparency in pricing of financial services and products to foster effective competition and delivery of services to majority of kenyans. • on the financial stability front, the government has continued to implement necessary reforms designed to strengthen the legal, regulatory and supervisory framework in to ensure stability of the financial system. lessons from the 2008 – 2009 global financial crisis call for regulators to invest in better regulation. better regulations is characterised by a regulatory framework with ability to : − readily identify weaknesses and emerging vulnerabilities ; − analyse and price risks ; − provide appropriate incentives ( and penalties ) to induce prudent behaviour in the market place ; and − encourage innovations and develop strong institutions of the regulators and the regulated – strong institutions enforce the rules of the game and define appropriate incentives. ladies and gentlemen : i am delighted to note that the finaccess survey, 2013 results bears witness to the above gains made in enhancing the reach and coverage of financial services to kenyans. it shows that the proportion of the adult population using formal financial services rose to 66. 7 % in 2013 from 27. 4 % and 41. 3 % in 2006 and 2009, respectively