- Market Stability and Banking Industry Development Celebrated as KBA Members Bid Farewell to Central Bank of Kenya Governor, Prof. Njuguna Ndung’u
Nairobi, 17 February 2015 – The outgoing Central Bank of Kenya Governor, Prof. Njuguna Ndung’u was recently celebrated for leading a progressive institution that has seen the regulator and the regulated collaborate on initiatives geared towards industry development and promoting financial inclusion.
During the event that was attended by the commercial bank chief executive officers, the KBA CEO Mr. Habil Olaka profiled the various CBK and KBA initiatives, including the Credit Information Sharing Initiative that has made great strides in mitigating risks associated with information asymmetry. Other notable areas are the introduction of the agency banking model, integration with mobile banking, and the cheque truncation project which has dramatically reduced clearing times from the highs of 21 days to just one day. “Indeed, the relationship our industry has had with the regulator has very much been a dynamic one and positive developments have come with each new Governor – especially in the most recent past,” said KBA Chariman, Mr. Joshua Oigara. “We have seen the Central Bank redefine its mandate, beyond ensuring market stability, to advancing economic development through a concerted financial inclusion agenda, which has broadened the number of citizens with access to formal financial services,” said Mr. Oigara. On his part, Prof. Ndung’u acknowledged that the financial sector players had over the last 10 years produced substantial progress towards improving the stability, accessibility, inclusivity and efficiency of the banking system. “It is no exaggeration that the resilience of our banking sector in recent years is largely an outcome of valuable partnership between the Government, the regulator, and the regulated,” said Governor Ndung’u. “Upgrading of the supervisory framework, one of the critical milestones of reform, has seen reduction in non-performing loans. Interest rate spreads have reduced considerably, due to lower loan loss provisions and overhead costs, but also lower profit margins, suggesting a certain degree of competition,” he said. Governor Ndung’u noted that many of the achievements realized were due to the partnership between the Government, the Central Bank of Kenya and the Kenya Bankers Association, the umbrella body of the banking industry. “This is not a common occurrence in most sectors. However, I can confidently tell you that CBK and the KBA have successfully demonstrated over the years that their otherwise conflicting objectives of protecting public interest and maximising profits can be optimised at the same time,” he said. Looking forward, the Governor challenged the banking industry to ensure that the various initiatives that are underway keep pace and ultimately lead to enhanced efficiencies and lower costs from which the banking public can benefit.