On February 11, 2019 In Statements and Speeches

Distinguished Guests, Ladies and Gentlemen, I am delighted to be here with you today to celebrate Central Bank of Kenya’s Jubilee. Let me first take this opportunity to express my utmost appreciation to our distinguished guests who have joined us for this occasion. I am informed many central banks are represented, in addition to representatives from regional bodies and development partners. In particular, I note with appreciation the presence of all central banks from the East African Community region.  This is a true demonstration of our commitment to our integration agenda. Ladies and Gentlemen, This occasion is an important milestone not just for the Central Bank but for the country as a whole.  I say so because the Bank, as a key player in the promotion of our country’s socio-economic development agenda, has made significant contribution in this respect. Indeed, the Bank has successfully steered the financial sector across a volatile landscape characterized by global and domestic challenges, and technological innovations. Your diligence and commitment have ensured that our financial sector remains one of the most vibrant, competitive and innovative on the continent.For this, I truly commend the current and previous Board members, Management and Staff of the Central Bank. Ladies and Gentlemen, 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. In the 70’s and 80’s, the Central Bank dealt with the negative effects of high oil prices,high interest rates, stagflation in the major economies, and other domestic shocks. Today we are grappling with the potential effects of Brexit. Ladies and Gentlemen, Another area where the Central Bank’s leadership continues to be felt is in our financial sector. Commercial banks in Kenya have expanded dramatically over the years, increasing their branch networks. The Central Bank has supported the growth of the sector through supervision and monitoring of its performance. However, we have not been immune to difficulties. 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. Following these episodes,the Central Bank played a key role in coming up with appropriate reforms to address these weaknesses and foster financial stability. These reforms included the implementation of stronger legal and regulatory frameworks, and the establishment of the Deposit Protection Fund Board (DPFB), the predecessor of the Kenya Deposit Insurance Corporation (KDIC). Ladies and Gentleman, Kenya’s financial sector is also widely recognized for its leadership in leveraging mobile phone technology. As a consequence, financial inclusion has increased substantially, with access to formal financial services having grown from 26 percent in 2006 to over 75 percentcurrently. The Central Bank has facilitated these developments by supporting innovation in the banking sector while applying safeguards to mitigate the potential risks. However, further work is needed to realize the Vision 2030 objective of a vibrant and competitive financial sector that drives high savings and supports investment. Despite the deepening of financial markets and the recent introduction of credit-information sharing, consumers have yet to benefit from reduced cost of credit. In fact, interest rate spreads in Kenya have remained higher than in comparable middle-income economies. These concerns led to recent legislation capping commercial bank interest rates. Nevertheless, additional reforms are needed to protect consumers and sustainably lower lending costs in line with our commitment of a free-market economy. Kenya is at a turning point, and the banking sector has a critical role in supporting the economic transformation. I urge commercial banks to be more innovative and, working closely with the Central Bank, to ensure that Kenyans have access to affordable credit. Ladies and Gentlemen, As the Central Bank celebrates its 50thanniversary, it has engaged in several initiatives aimed at demystifying its role and mandate as well as promoting financial literacy. I commend the Central Bank for focusing on the youth during these celebrations, as they are the key drivers of the development of our nation. One of the initiatives geared towards the youth was the sponsorship of the Kenya Music Festival as “Title and Thematic Sponsor”. I was delighted to watch the stellar performance of the winners at the State Concert in August 2016. I also applaud the Central Bank for launching itsInternship Programme and the Youth EmpowermentProgramme, which are in line with my Administration’s effort to build skills for the youth and effectively tackle unemployment. Finally, as we celebrate the Central Bank’s Golden Jubilee today, we will also launch yet another worthy initiative, the Central Bank of Kenya Numismatic Exhibition at the National Museum. The exhibition of notes and currencies will allow visitors to learn more about the rich history of the Kenya currency and of the Central Bank of Kenya. The exhibition will offer visitors and future generations a glimpse of our country’s cultural history as well as the main economic developments over the last 50 years. Iencourage you all to use this opportunity to visit the exhibition. Thank You.

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