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Kenya's financial sector seeks partners in growth

(China Daily)
Updated: 2010-05-03 06:41

Offers most sophisticated financial sector in East Africa

Major investment in modern technology and facilities is playing a vital role in Kenya's journey towards its many Vision 2030 socioeconomic goals.

Ministers have identified investment in financial services as a key driver of the economy over the next two decades, with the Nairobi-based industry having a dual role as a magnet for foreign investment to fund Vision 2030 projects, and as an investment destination in its own right.

Vision 2030 aims to transform the banking and financial services industry into "a vibrant and globally competitive financial sector driving high levels of savings and financing Kenya's investment needs".

The sector - widely recognized as being safe, sound and transparent - generates about 5 percent of GDP and employs approximately 22,000 staff in areas such as banking, capital markets, brokerages, insurance, money transfer agencies, and credit providers.

Under the first medium-term plan of Vision 2030, the government of President Mwai Kibaki expects both local and foreign private investors to fund up to $3.25 billion of development projects through a series of public private partnerships.

With responsibility for ensuring these massive sums are obtained from sources such as China, the performance of the sector is absolutely vital to the overall success of Vision 2030.

"The importance and relevance of the financial sector in Kenya's growth and development can't be over emphasized," said Kenya's Deputy Prime Minister and Minister for Finance Uhuru Kenyatta.

"Our objective is to make Kenya the region's financial hub and the gateway to Africa for global investors. We want international partners to see Kenya as a stepping stone to the region and a market of 300 million people."

While the plan identifies several major challenges ahead, the sector is poised for take-off as legal, institutional and regulatory reforms encourage industrial expansion through such measures as the arrival of stronger and larger banks, increased access to finance and comprehensive overhauls of capital markets and pension and social security systems.

"We are focusing on economic reforms in the capital markets that will strengthen governance and ensure that Kenya is a regional center for capital markets and banking," said Kenyatta.

"We are de-mutualizing our stock exchange to ensure greater confidence for investors, strengthening our revenue collection processes and ensuring resources are utilized in a way that increases productivity and reduces waste."

In addition to Kenya establishing Nairobi as the region's financial services' capital, the government is determined to educate and inform businesses, entrepreneurs, and citizens, about the many benefits of financial products.

Only a fifth of people currently have access to such bank accounts and similar services, a figure that officials are keen to increase as the nation looks to reach middle-income status in the next 20 years.

In the commercial arena, innovative and sustainable strategies such as micro-finance programs are being developed and streamlined and efficient fiscal systems being introduced across the sector as it prepares for consolidation.

As Kenya's leading international trade partner, China is paying close attention to the development of the sector as it looks to exploit its economic skills, knowledge and experience.

Lucrative business openings are present throughout the industry, with a fast-improving transparent and effective regulatory framework providing an attractive commercial investment climate.

"Our relationship with China is one of our most valued partnerships - being based on mutual respect, mutual understanding and mutual will," Kenyatta said.

"With China's growing interest and resources in the region, our bilateral relationship will improve infrastructure development and increase trade in Kenya and the East African region."

(China Daily 05/03/2010 page21)