President Uhuru Kenyatta has urged commercial banks to work closely with the Central Bank and other stakeholders to provide affordable credit to Kenyans.
President Kenyatta expressed concern that interest rates in Kenya have remained higher than in comparable middle-income economies despite the deepening of financial markets and the recent introduction of credit-information sharing.
“Consumers are yet to benefit from reduced cost of credit. The concerns led to recent legislation capping commercial bank interest rates,” said the President during the Central Bank of Kenya’s 50th anniversary celebrations at the National Museums of Kenya in Nairobi.
The President last month signed into law a Bill capping bank interest rates at 4 per cent above the Central Bank Benchmark Rate.
The Head of State said more reforms are necessary in the financial sector to create a vibrant and competitive financial sector that drives high savings and supports investment in line with the country’s development blueprint, Vision 2030.
“We experienced banking crises in the 80’s and early 90’s, resulting largely from weak corporate governance, insider lending, and poor asset quality and management. The Central Bank played a key role in coming up with appropriate reforms to address the weaknesses and foster financial stability,” he added.
Implementation of stronger legal and regulatory frameworks, and establishment of the Deposit Protection Fund Board (DPFB), the predecessor of the Kenya Deposit Insurance Corporation (KDIC) are among the reforms undertaken by CBK to strengthen the financial sector in the country, the President said.
He added: “Kenya’s financial sector is also widely recognized for its leadership in leveraging mobile phone technology. Consequently, financial inclusion has increased substantially, with access to formal financial services having grown from 26 percent in 2006 to over 75 percent currently.”
President Kenyatta lauded CBK for supporting innovation in the banking sector while applying safeguards to mitigate the potential risks, encouraging the financial regulator to remain diligent and committed to ensure the sector remains one of the most vibrant, competitive and innovative on the continent.
“Over the last 50 years the Central Bank of Kenya has supported the country’s economic growth and poverty reduction agenda by promoting price stability and fostering a stable financial system,” the President said.
He also commended the various initiatives CBK has adopted in the last 50 years to demystify its role and mandate as well as promote financial literacy.
The President, who launched the CBK Numismatic museum, applauded the financial regulator for focusing on the youth who are the key drivers of the country’s development.
President Kenyatta said the Central Bank of Kenya’s numismatic exhibition of notes and currencies at the National Museum will allow visitors to learn more about the rich history of the Kenya currency and the Central Bank of Kenya.
“One of the initiatives geared towards the youth was the sponsorship of the Kenya Music Festival as “Title and Thematic Sponsor,” said the President.
CBK Governor Dr. Patrick Njoroge said the bank sponsored this year’s Kenya Music Festival that involved over 6 million students throughout the country.
He said the financial regulator is also engaged in internship and youth Empowerment programs that are in line with the Government’s efforts to tackle unemployment.
Treasury Cabinet Secretary Henry Rotich also spoke during the occasion that was attended by current and former Central Bank Governors from the region.