jacinta mwatela : regulation of microfinance in kenya speech by mrs jacinta mwatela, deputy governor of the central bank of kenya, at the stakeholders forum on the deposit - taking microfinance regulations issued under the microfinance act, kenya school of monetary studies, nairobi, 12 may 2008. * * * the chairperson, the association of microfinance institutions ( amfi ) ; the chief executive officer, amfi ; microfinance practitioners ; development partners ; distinguished guests and participants ; ladies and gentlemen ; it gives me great pleasure to be with you this morning during this important stakeholders ’ forum on the deposit - taking microfinance regulations, 2008 issued under the microfinance act, 2006 ( act no. 19 of 2006 ). these regulations set the stage for the implementation of the microfinance act and are expected to usher in a new dawn in the development of the microfinance industry in kenya as an integral part of the financial system. let me also take this opportunity to thank the association of microfinance institutions ( amfi ), all industry players and stakeholders for their collaboration, input and patience. i am aware that the delay in the completion of the drafting of the regulations and the appointment of the commencement date of the microfinance act has caused concern in the industry. the work on the regulations has been a considerable one and the challenges mammoth. however, good things, they say, come to those who wait. i therefore congratulate amfi and the entire microfinance fraternity for keeping the faith and staying the course and urge them to continue to be patient as the appointment of the commencement date and regulations are with the attorney general ’ s chambers for gazettement. this will be out shortly. ladies and gentlemen ; as you are aware the legal, regulatory and supervisory regime, spelt out under the act and regulations, will allow regulated deposit - taking microfinance institutions to offer a variety of financial services and products including savings mobilization, credit facilities and domestic money transfer, among others to kenyans. i expect that many microfinance institutions and potential investors will take the opportunity to establish deposittaking business in order to enhance access to financial services and products by kenyans. according to the finaccess study conducted in 2006, about 38 per cent of adult kenyans are un - served by our financial system indicating a huge market potential for the microfinance industry. the study shows that only 19 per cent of kenyans are served

long term. the bank of albania sticks to the opinion that the public finance consolidation should anchor to an effective and transparent fiscal rule. this rule would increase the short - term flexibility of public finances and reduce the fiscal adjustment cost. second, the overall economic and financial stability is a prerequisite for a rapid economic growth. the monetary policy has been and will remain oriented toward meeting our inflation target. in line with the cyclical situation, this policy has provided its stimulus through the key interest rate cut and ongoing liquidity injection into the banking system. we have also revised the banking system regulatory basis from the viewpoint of easing it, in order to stimulate lending by the banking system. i avail myself of the opportunity to reiterate that the banking system remains profitable, liquid and well - capitalised. safeguarding the stability of this system will always be on our focus. bis central bankers ’ speeches third, reducing uncertainties and risk premiums in the economy is an important priority. as i have already stated, these uncertainties stem, to a great extent, from the foreign market, but a part of them stems from the albanian economy. without intending to make a list, i will mention just a few : • reducing informality should be a primary objective. besides outflows in public finances, informality brings hidden costs in terms of diminishing competition, inefficiency in terms of lack of balance sheet transparency, and artificially increased financing costs to businesses. • fostering the financial system infrastructure protection is another aspect deserving attention. the bank of albania signed and has already made effective a cooperation agreement with the people ’ s bank of china, which also provides for the possibility to obtain liquidity in case of need. an important step in this regard is the agreement between the deposit insurance agency and the european bank for reconstruction and development to increase the deposit insurance coverage. we deem that there is room for other agreements with international financial institutions specialised in providing funds and assistance. establishing collective public protection releases the financial system and businesses from setting up individual protection. besides, it may be transformed into a necessary source of funds for the albanian economy. • improving the business climate further and observing the contract enforcement. the business climate is a rather complex issue, but i would highlight two issues here. first, the payment of deferred budget liabilities as a priority. in spite of the financial cost, it is an important step for easing the debt burden in the economy and signalling the political willingness to guarantee