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2019 Vanguard March (Web)

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2019 Vanguard March (Web) A NEWSLETTER FOR MEMBERS OF THE KENYA BANKERS ASSOCIATION • MARCH 2019 APPOINTMENTS The numbers Prior to the caps, the SME portfolio was growing at a rate of 15% per annum. This reduced to about Citi Bank has appointed 6% per annum by Joyce-Ann Wainaina as the September 2016 Global Subsidiaries Group (GSG) Cluster Head for Sub Sahara Africa. She will lead the region from Nairobi. Martin Mugambi has been Court Ruling Revives Hope For appointed Citi Country Officer (CCO) Kenya and East Africa Cluster Head. He will also have Interest Rates Liberalization oversight of Tanzania, Uganda and Zambia. court ruling has declared sections of In a separate report, Central Bank of Kenya the Banking (Amendment) Act 2016 indicates that bank lending to SMEs fell by as unconstitutional, setting the stage for much as 5.7 percent or Kes 13.8 billion between intensifiedA cross-sector engagements that could August 2016 and April 2017 (eight months). see the liberalization of interest rates in the At this rate, more than Kes 40 billion has been banking industry within the next twelve months. redirected from enterprise development since the caps were put in place. In a judgment delivered in March, the High Family Bank has announced Court observed that Section 33B (1) and (2) Kenya Bankers Association CEO Dr. Habil Olaka the appointment of Rebecca of the Act - which introduced a cap on interest said the court directive provides an opportunity Mbithi as the bank’s Chief rates and a floor on deposit rates- are at odds to re-engage the National Assembly and other Executive Officer. Ms. Mbithi with the Constitution. stakeholders such as CBK and Treasury to was previously the bank’s Legal facilitate amendments to the law that would The ruling comes in the wake of rising concerns Director. create an enabling environment. As a solution, about diminishing access to credit for small the CBK is working with banks to implement businesses, which are core drivers of the risk-based pricing across their portfolios. There economy. According to the National Treasury, For more information contact KBA has also been a proposal raised by Hon. Moses there are more than 1.56 million licensed and Kuria which supports the risk-based pricing CONTACT INFORMATION 5.9 million unlicensed MSMEs, contributing to element that is introduced in the Banking Sector Kenya Bankers Association the creation of employment to approximately Charter by Central Bank. The mitigations will be 13 million Kenyans every year. Prior to the caps, Phone: a key basis of engagement with stakeholders to the SME portfolio was growing at a rate of (+254-20) 2221704 / 2224014 explore how such measures and other solutions 15% per annum. This reduced to about 6% by can sustainably address the cost of credit and September 2016. Email: access to bank finance. [email protected] • Committees and Sub- • General Body Meeting CALENDAR Committees: Ops & Technical; • Committees and Sub-Committees: March Banks Fraud; Risk & Security; April Finance & Audit; Risk & Security; Legal Highlights Legal Affairs; Bank Security; Highlights Affairs; Bank Security; IT Systems; IT Systems; Public Relations; Public Relations; Tax; Forensics; Forensics; Clearing House Clearing House; NPS Page 2 | VANGUARD INDUSTRY FOCUS developing world are 9 percent less likely than Mobile Banking Offers New men to have a bank account, according the Opportunities for Lenders In Kenya report which is released every three years. Universal Access obile banking is increasingly Kenya is trailed by Sudan with 52 percent, Two out of three adults say lack of money is becoming a promising niche for Gabon at 50 percent, and the DRC with 37 the reason they do not have bank accounts banks. The rise in the use of mobile percent of adults using mobile phones to while one in three adults say the cost of Mbanking can be credited to the surge in conduct transactions. opening and maintaining a bank account, as mobile phone penetration which has now well as, distance are some of the reasons for crossed the 100 percent mark, according not having an account, the World Bank says. Mobile Expansion About 1.7 billion adults globally do not have to Communications Authority of Kenya (CA) Mobile banking has grown significantly in statistics. bank accounts. The World Bank is aiming for Sub-Saharan Africa with the World Bank universal financial access by next year. With the impressive landmark, Kenya is in saying mobile banking has expanded to 16 the same league with few countries in Africa percent of the continent’s market. In Kenya, The use of mobile banking in Kenya is widely that include Morocco, Namibia and Tunisia. this has played a great role in enhancing recognized as an increasingly important The first quarter sector statistics report for financial access in the country. Forbes component of national and regional the financial year 2018/2019 by CA show reports that Kenya has more than 23 million economic development. Mobile banking that the mobile penetration – the total of M-Pesa’s 28.5 million users in East Africa. enhances the number of existing channels number of active SIM cards calculated as a M-Pesa shares the money services industry of distribution that a bank employs to offer percentage of total population in the country in Kenya with Airtel Money, which has more its services. It also offers significant avenues – rose by 2.3 percentage points to stand at than 3 million active subscriptions, Equitel for additional revenue generation and 100.1 per cent from 97.8 per cent reported Money with almost 2 million, followed by accommodating sections of the population last quarter. T-Kash and Mobile Pay, according to the CA. that are not banked. In the wake of the trajectory, World Bank has Global Findex suggests that 69 percent Given that the mobile banking channel has released a report indicating that 68 percent of adults in the world have an account morphed into the most preferable banking of Kenyan adults use a mobile phone to with a financial institution or mobile money channel, banks in Kenya should continue transact, making Kenyans the biggest users service. About 1.2 billion adults have opened to diversify their products to tap into the of mobile banking in Sub-Saharan Africa. accounts since 2011 and women in the potential of the platform. House Prices Reverse Declining Trend, Signal Slow Growth ouse prices developers,” it says, adding increased marginally that limited credit is a Total units offered by 1.49 percent in binding constraint on the Hthe Fourth Quarter of 2018, demand side. % Index reversing the downward 11.6 More House Space trend that prevailed in the Maisonettes preceding three quarters The KBA-HPI further of the year. According shows that homeowners’ to the Kenya Bankers preferences have shifted Association House Price to new buildings, with buyers exhibiting a strong 76.3% Index (KBA-HPI), the Apartments pattern mirrors the price preference for more evolution experienced in floorspace. This suggests 12.1% 2017 with indications that that developers can benefit Bungalows the slow pace of price from increased plinth area growth experienced in the by opting for higher-density past quarters will continue developments. to prevail. On the other hand, The Index notes that while house prices were also the modest rise provides significantly influenced respite from the depressed by location, pointing to a distinct buyer preference price outlook, it reflects Overall Price Change (%) the general house-price of upper market and middle-income segments stability, attributable to the 2.20 supply-demand dynamics compared to lower income 2.08 1.73 1.76 in the housing market. segments of the housing 1.58 1.49 1.40 1.35 “On the supply side, the market. The analysis also reveals that during the 1.10 0.98 market appears to be tilting 0.68 towards few additional quarter, the type of house 0.42 units coming into the was a determinant of price differences in the various market due to constrained Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 access to credit by KBA-HPI regions. 2016 2017 2018 VANGUARD | Page 3 INDUSTRY FOCUS KBA Signs Partnership MOU with Financial Markets Association The ACI training provides dealers and treasurers with knowledge on workings and structure of the exchange and money market, including products and skills for competent participation. Dealers & Treasurers In March this year, KBA organised a forum for dealers and treasurers. Graced by CBK Governor Dr. Patrick Njoroge and Deputy Governor Ms. Sheila M’Mbijjewe, the forum explored opportunities for collaboration in promoting professionalism across all spheres of the banking industry. Mr. Kennedy Mutisya, who is KBA’s Chief Finance Officer, welcomed the MOU with ACI-Kenya, saying it will go he Kenya Bankers Association training elements ahead of the course. a long way in entrenching ethics and has signed a Memorandum ACI-Kenya offers the training annually. professionalism among dealers and of Understanding with ACI However, the training sessions can be treasurers in the banking industry. T- Financial Markets Association of organised more frequently in line with “We are happy to partner with ACI- Kenya, paving the way to closer prevailing demand. Kenya in this initiative. The MOU will collaboration in efforts aimed at “Under the MOU, KBA will be an go a long way in facilitating access promoting development in the financial important partner in creating awareness to ACI certification and fostering markets. ACI-Kenya is a professional on the importance of promoting professionalism, which will ultimately organisation that brings together professionalism and ethics, as well enhance industry growth,’’ he said. forex, money market and income as, fostering economic development,’’ traders of commercial banks in Kenya.
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