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Census data to help Kenyan banking

NAIROBI, Kenya, Sep 14 – The Central Bank of Kenya has said it is awaiting data from the just concluded Population and Housing Census for it to develop policies that can further expand access to financial services.

CBK Governor Prof Njuguna Ndungu said on Monday that figures from the count would among other things provide relevant information which they would use to increase financial inclusion for all households in the country.

“With the Census data we are going to deal with how many households are already covered by the banking sector and how much we need to do. There were (in the Census) elaborate questions that will help us to come up with a database or a benchmark through which we can evaluate most of the households,” he emphasised.

It is estimated that 2.5 billion people in the world do not have access to savings accounts and other financial services. In Kenya, a recent Financial Access Survey indicates that about 33 percent of Kenya’s bankable population is totally excluded from financial services and products.

The Governor spoke after the opening of a conference for nearly 100 central bankers and other financial policymakers under the umbrella body of the Alliance for Financial Inclusion (AFI) that seek to make financial services available to millions of people living under the poverty line.

This initiative has been informed by research which shows that better access to financial services can fuel economic growth by raising national income through increased savings and investments in poor households as well as in small and medium enterprises.

This access also enhances financial stability by injecting formal savings into the system, diversifying the capital base, and providing stability during global downturns, studies further show.

Mr Ndungu said the CBK was working on the modalities of how these services can be offered through agencies such as Microfinance and Saccos.

“AFI is helping Central Bank to visit some of the countries that have perfected such kind of a model and we will come up with rules and regulations about how it will work,” he disclosed.

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The inception of Micro Financial Institutions has increased accessibility to such services from 19 percent in 2006 to 23 percent in 2009.

Prime Minister Raila Odinga who was also at the three- day function however called on financial institutions to relax their lending terms to facilitate borrowing and investment to speed economic growth in the country.

“When the population accesses more borrowing opportunities, the liquidity ratio improves and open market for trade and investment which contribute to economic growth,” Mr Odinga said.

Lending rates have increased beyond 13 percent while the deposit rates have gone even as low as zero percent, he complained, while chastising banks for their reluctance to reduce these rates despite efforts by CBK to cut a key rate and improve liquidity in the market.

The Premier challenged the policy makers to formulate consumer protection framework and financial education programmes that help people to make wise investment decisions which would also go a long way in increasing the national savings ratio from the current 17 percent to 30 percent in the next 10 years.

“We expect this workshop to proposed recommendation that will clear all these barriers to financial services and pursue technological avenues in the sector including the mobile phone banking options,” he urged.

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