NAIROBI, Kenya, Apr 7 – President Mwai Kibaki has challenged micro-finance providers to increase the range of financial services they offer in order to address the economic needs of the underprivileged members of the society.
President Kibaki asserted that a vibrant micro-finance sector considerably contributes towards a country’s equitable development because of availing financial support to under-served and marginalized members of the society.
“Due to the central role the micro-finance sector plays in national development, several challenges that stand in the way of achieving universal access to financial services among the poor need to be fully addressed,” the President said on Wednesday at the opening of the Africa-Middle East Regional Micro-Credit Summit.
The Head of State affirmed that there was urgent need to exploit the full potential micro-finance can make on poverty reduction and advocated for the instituting of measures to address the various challenges facing the sector.
He particularly called for reduced cost of providing financial services to the poor as well as the establishment of credit rating systems and credit referencing bureaus as panacea to the real challenges facing the micro-finance facilities.
The President said: “We need to effectively tackle the challenges that continue to stand in the way of achieving universal access to financial services for the poor in our Region. The sources of funds and the cost of providing financial services as well as the technology and infrastructure available to the sector remain real challenges.”
President Kibaki confirmed that the Government appreciated the significant role played by the micro-finance towards alleviating poverty in many parts of the world and Kenya in particular.
The President underscored that the sector was a powerful vehicle for creating sustainable employment due to its enhanced capacity of supporting many medium, small and micro enterprises.
“Experience has shown that it is micro and small businesses, and not large corporations, that drive employment, growth and development in the emerging markets,” the Head of State said.
During the occasion, the President confirmed the Government’s support to micro-finance providers through improved regulatory framework to enable the sector thrive in a systematic manner and to continue making Kenya the leading cooperative micro-finance provider in Africa and 7th internationally.
“We have, for example, enacted the Microfinance Act, 2006 to provide a more enabling environment for microfinance institutions. In addition, we have enacted the Sacco Societies Act, 2008, which aims at improving the performance of a large number of co-operative microfinance institutions,” he said.
The President commended the Microcredit Summit Campaign for positioning itself to lead the fight against poverty and to empower disadvantaged segments of the society particularly in developing nations and for achieving huge success.
In this regard he particularly expressed satisfaction that the campaign had surpassed its original goal of reaching 100 million of the poorest people by year 2007 and had now set a new target of ensuring 175 million families, that live below one dollar per day, had access to credit by 2015.
He declared: “I am happy to note that we have the Microcredit Summit Campaign as a major force behind this Conference. As the World’s largest global network of Microfinance Stakeholders, Microcredit Summit Campaign is well positioned to lead this fight in empowering our people.”
President Kibaki pointed out that the timing of the Summit was opportune because the challenge of fighting poverty in Sub-Saharan African nations is urgent adding that the extent and depth of poverty and food insecurity in developing countries is unacceptable.
“This Summit is not only timely, but also critically important for Africa, and, indeed, other developing countries. It is being held against the backdrop of the financial instability that the global economy is just emerging from. It will also be recalled that the combined effects of high food and energy prices had a devastating effect on our economies,” the President observed.
The Head of State noted that Kenya’s mobile phone money transfer services had proved successful and being used by an estimated population of 10 million people countrywide a majority of whom were previously sidelined by the formal banking sector.
“While in Kenya, I do encourage delegates to study the workings of Kenya’s mobile phone money transfer programs that have proved very successful. Today we have nearly TEN million people utilizing this innovative money transfer program.”
President Kibaki said that the country was proud of hosting the international summit and invited delegates attending the forum to also take time to sample Kenya’s world-class tourist sites and as well enjoy the hospitality of the Kenyan people.
Deputy Prime Minister and Minister of Finance Uhuru Kenyatta lauded the microfinance sector in the country for the significant role it played in poverty alleviation among the rural folk.
The Minister said his ministry was consulting with the microfinance sector players on further appropriate reforms on the legal and regulatory frameworks to enhance effectiveness.
Mr Kenyatta said two microfinance institutions have already moved to depository financial services while eight applications are undergoing due consideration by the Central Bank of Kenya.
In her remarks, the Queen of Spain, Her Majesty Sofia Margaret Victoria Frederica called for enhanced mutual trust between the financial institutions and customers to improve access to finances to fund the various activities aimed at uplifting the standards of living among needy people.
The Queen announced that the next Microfinance Summit, to be held next year, will be hosted for the first time in Europe by Spain.
The microfinance, a sector and practice embraced by Kenya, has managed to reach most unbanked Kenyans and has an estimated membership base of 6.5 million people in the country.
The four-day annual global Summit, whose objective is to alleviate poverty in the continent, is being held in Africa for the first time.
The Summit Campaign director Sam Daley said this year’s forum was the most attended conference and has attracted over 1,200 delegates from 75 countries across the world.
Others who addressed the Summit included Her Royal Highness Prince Maxima of Netherlands, Vice-President of Gambia, Dr Isatou Njie-Saidy, Managing Director, Grameen Bank, Nobel Peace Laureate Prof Muhammad Yunus and the Chairperson Association of Microfinance Institutions of Kenya Mrs Lydia Koros.