One Industry. Transforming Kenya

Industry Conference Probes Drivers of Pricing, Credit Mobilization and Market Expectations

Nairobi 23rd September 2020 - The Kenya Bankers Association's 9th Annual Banking Research Conference kicked off today with papers that shared a wide range of insights on how the banking industry's structure - along with the behavioural dynamics of non-financial economic agents expectations - influence credit pricing in the economy within the current regulatory environment.

The presentations further examined ways by which the structure of the banking system impacts credit allocation and pricing, analysing the bearing of non-financial sector players' expectations on the value proposition of the banking sector players. Discussions on the impact of the changing regulatory environment on the intermediation role of the banking sector also dominated the first day of the forum that brought together various stakeholders in the financial sector.

In remarks delivered to mark the opening of the three-day forum, Treasury Cabinet Secretary Amb. Ukur Yattani underscored the need for the banking sector to continue optimising its operational resilience to sustain business the industry's contribution to the economy in light of the COVID-19 pandemic.

"In appreciating the critical role played by the Micro, Small and Medium Enterprises in the economy, the Government recently announced a Sh. 10 billion Credit Guarantee Scheme targeting this critical sector of the economy. It is my conviction that these interventions will facilitate the much-needed access to affordable credit for MSMEs in an efficient and structured manner during this period, noted Amb. Yattani in the remarks read on his behalf by Budget and Fiscal Economic Affairs Director General Mr. Albert Mwenda.

Speaking during the conference's opening session, KBA Chief Executive Officer Dr. Habil Olaka noted that the three-day conference's focus aligns with the emerging industry dynamics, adding that the event provides a platform for the industry to engage in the bid to address matters on the implications of the ever-changing market structure on credit allocation and pricing as well as the value proposition of the banking industry players.

"I am glad to note that deliberations that will be held in the course of this conference will also shine a spotlight on the policy and regulatory environment underpinning the banking industry operations, with a specific focus on how this relates to market stability, credit allocation, market structure, and the strategic regulatory intention of steering the market in the direction of optimising its role in socio-economic development," said Dr. Olaka.

Dr. Olaka also observed that in light of the Coronavirus pandemic, the demand for banking technology-led services and products has gone up rapidly, noting that despite the disruption the industry has continued to resiliently navigate the challenging business environment.

"As shown in this year's Kenya Bankers Association's State of the Banking Industry report (SBI) released last month, even amidst conditions that have affected balance sheet growth and asset quality, the Kenyan banking system remains sufficiently capitalised. This is a great indication that our policymaking and implementation can build resilience capacity for the future," he said, adding that the resilience has been realised through in-depth research and fact-based innovative operational efficiency models.

A total of eight papers have been lined up for the three-day event under the theme 'Banking and Social Development: Market Structure, Behavioural Evolution and Policy Dynamics'. Other topics that will be discussed include studies on factors that influence bank deposit mobilisation and credit creation; responsiveness of the industry to lending changes in credit demand expectations; the influence of financial technology on financial inclusion; regulation and bank stability; and an evaluation of the interaction between competition and access to finance in the economy.

About the Kenya Bankers Association:

KBA (www.kba.co.ke) was founded on 16th July 1962. Today, KBA is the financial sector's leading advocacy group and banking industry umbrella body that represents total assets in excess of USD 40 billion. KBA has evolved and broadened its function to include advocacy on behalf of the banking industry, and championing financial sector development through strategic projects such as the launch of the industry's first P2P digital payments platform PesaLink. In line with the Government's policy on public-private partnerships, KBA and Central Bank of Kenya have implemented key projects such as modernization of the National Payments System through the Automated Clearing House, implementing the Real Time Gross Settlement System (RTGS), and the Kenya Credit Information Sharing Initiative. The KBA members are comprised of commercial banks and deposit taking microfinance banks. For more information, visit www.kba.co.ke.

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