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Central bank working to create safe havens for saving, says Prof Ndung’u


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By Prof Njuguna Ndung’u

During the launch of the Third National FinAccess 2013 Survey, the government recognised the important role played by the financial system in the economy.CBK policies must create safe environment for saversCBK policies must create safe environment for savers

Our vision 2030 envisages the financial sector being transformed into an innovative, vibrant and globally competitive sector to drive high levels of savings to finance the country`s investment needs.

The transformation entails doubling deposits mobilization from 44 to 80 per cent of GDP and enhancing growth of savings channeled into productive investments from 14 to 30 per cent.

This goal cannot be achieved if the vision`s three core objectives, namely: Enhancing Financial system Stability, Efficiency, and Expanding Financial Inclusion are not addressed.

Without expanding inclusion to financial services, there is a case for expanding quality access and affordable, appropriate and sustainable financial services and products to majority of the population.

This will inevitably increase their access and usage of financial market and products that will encourage savings/investments and allow capital/asset accumulation.

Haven

A safe haven for savings by the poor reduces their vulnerability to periodic economic and social shocks and enhances their productive capacity.

The Three National Financial Access Surveys for 2006, 2009 and 2013 have clearly demonstrated that the Kenyan landscape has changed considerably over period 2006-2013.

The financial system is now offering a wide range of financial services and products to more Kenyans, covering a wider geographical spread, and even going beyond its borders more than ever before.

These developments are attributable to expansions in financial sector infrastructure (including innovation in products and adaptive institutional outreach) and advances in technology.

I am delighted to note that we have added the spatial mapping of financial services providers to the FinAccess Surveys by digitally mapping out all the financial access touch points in the country.

This affords us more in-depth knowledge on how to address the challenges we face in expanding inclusion and ensure that the majority of our populace access and use affordable, appropriate and sustainable services.

Some of the insights we have gained from the mapping exercise include: Kenya enjoys better financial access compared to countries in the region. The percentage of the population living within a three kilometer distance of a financial access touch point is 58.7 per cent for Kenya, 44.1per cent for Uganda, 42.7 per cent for Nigeria and 28.3 per cent for Tanzania.

In terms of touch points per 100,000 people; Kenya has 161.7, Uganda 63.1 Tanzania 48.9 and Nigeria 11.4.

Touch points

Financial services touch points tend to be located in economically active regions of the country: more than in urban areas use of portfolios of financial services is more prevalent.

Financial services touch points locate away from areas of high poverty levels, for instance, 69 per cent of all financial access touch points are located in areas with the least likelihood of poverty even though only 30 per cent of the population live in those areas.

Kenyans have greater access to mobile phone financial services providers compared to banks. For example, Kenyans living within three kilometer of a mobile phone money agent is 58.6 per cent or 23.64 million compared to only 21.2 per cent or 8.57 million living near a bank branch.

The results we are releasing today are as a result of development in the wider economy, infrastructural facilities, technological innovation, institutional developments, natural features, as well as financial system policy and regulatory reforms, increased competition and innovations I the market.

These developments have set off a dramatic shift away from the traditional delivery of financial services.

In the delivery of financial services, innovations using technology such as Automated Teller Machines (ATMs), Point-Of-Sale (POS) devices, the internet and mobile phone platforms and its inter-linkages with financial institutions platforms have accelerated and moved us closer to branchless banking.

We however, still have some ground to cover in expanding access to financial services, given that about 25 per cent of the population remains totally excluded.

The information generated by this spatial mapping exercise will help financial service providers identify where opportunities exist.

The results from all these efforts will help the public and the private sector to better understand the developments and its dynamics in order to broader Kenyan financial market landscape and its dynamics in order to develop appropriate policy strategies and products as well as delivery channels to targeted clientele that they have not served before.

The GIS Spatial Mapping Project brings forth more information necessary to satisfy the objectives of the Financial Access Partnership which remain; to provide information to policymakers about the main barriers to financial access and inclusion and to provide information to the private sector on market conditions and opportunities.

It would provide a solid empirical basis to track progress on financial inclusion and evaluate the effect of government, donor and industry led initiatives.

It also aims to provide data for use in research into the impact of access to financial services and products on growth, development and poverty reduction.

 

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