NAIROBI, Kenya, Aug 31- The financial sector is set to develop further following the signing of an agreement between four domestic regulators that will allow them to oversee and coordinate standards that cut across the industry.
The Central Bank of Kenya (CBK), Capital Markets Authority (CMA), Insurance Regulatory Authority (IRA) and Retirement Benefits Authority (RBA) on Monday signed a Memorandum of Understanding that will see them collaborate in fields such as information sharing and supervision of market intermediaries.
“The MOU that we are signing today is to allow us to have some ownership in terms of market development, create checks and balances but at the same time come up with initiatives to develop the market,” said CBK Chairman and Governor Prof Njuguna Ndungu.
These institutions will also partner in areas such as licensing, inspection, fraud handling, research and training which will go along in reducing their cost of doing business and as well as minimise the duplication of roles.
Thus players who’ve been operating in the market without integrity can expected to be locked out while the cost of accessing financial services should come down significantly.
Mr Ndungu said with the signing of the MOU, Kenya had managed to beat the deadline to have regulators in the East African region sign an agreement to work together by May 2010.
A technical committee that will oversee the implementation of this MOU has already been formed.
This initiative was informed in part by the regulators need to protect the sector, which is increasingly becoming integrated , against shocks such as those that caused the global financial crisis and thus ensure that innovative products and development in the sector are kept in check despite the interconnectivity.
Finance Minister Uhuru Kenyatta challenged these regulators to partner and empower investors by educating them on financial matters so that they can make wise investment decisions.
“It is through financial education that Kenyans will be empowered to comprehend the objective, advice, skills, information and financial risk awareness that are key to making prudent financial decisions,” the minister remarked.
Mr Kenyatta assured of the government’s commitment to support this sector which has been identified as one of the six key industries expected to drive Vision 2030.
Towards this end, he outlined the various reforms and initiatives such as demutualization of the Nairobi Stock Exchange and amendments to the Banking and Insurance Acts that are being undertaken to create a vibrant and globally competitive industry that will help reinforce Kenya as a regional financial sector hub.
In the same breath, Mr Kenyatta assured of the government’s pledge to give institutions in not only the financial industry but other sectors of the economy a free hand to operate.
“As a government, we intend not to interfere politically in any way with the ongoing regulations. We believe we have strong and sound institutions,” he stated adding that the government would strive to strengthen these organisations to ensure they operate optimally and delivery enhanced services to Kenyans.