BANKING & PAYMENT TECHNOLOGIES EAST AFRICA, 2009: Opening remarks by the Hon. Uhuru Kenyatta, EGH, MP, Deputy Prime Minister and Minister for Finance

The Chairman of AITEC East Africa Mr. Sean Moroney;

Distinguished speakers

Invited Guests; 

Ladies and Gentlemen: 

1.          I am delighted to be here this afternoon to preside over the official opening of the Third Annual Banking and Technology East Africa Conference and I would like to thank the Chairman of AITEC East Africa, Mr. Sean Moroney for inviting me. I would also like to recognize the Chairman of the conference, Mr. Joe DiVanna, the CEO of Maris Strategies of the United Kingdom. Let me also take this opportunity to extend a warm welcome to those of you who are visiting Kenya and to encourage you to spare some time and enjoy our beautiful country.

2.          Ladies and Gentlemen, let me at the outset say that this conference is coming at a very opportune time considering what is happening in the global financial markets. As you are very much aware, this year’s conference is taking place at a time when the global economy is undergoing a severe financial crisis that has triggered the worst global recession since the great depression. In many other parts of the world, a conference like this would have focused on the impact of the crisis on businesses, and measures to take in order to mitigate its effect on profitability. In this respect, it is therefore comforting to note that a major part of this conference is forward looking, focusing mainly on mobile banking and the technologies that underpin it.

3.          While East African banks were largely unaffected by the global financial crisis, this is not the time to sit back and just watch as the crisis unfolds. As some of you have put it, this is the time for East African Banks to leverage their relatively strong positions to take advantage of these technologies in order to unlock the potential of the region’s majority who are unbanked while at the same time preparing for the next wave of competition. I am sure you are very much aware that the international banking and financial landscape has changed beyond recognition over the last decade, driven by rapid innovations in financial markets and the internationalization of financial flows all underpinned by liberalization and a dynamic and innovative Information and communication Technologies (ICT).

4.             As a result of these innovative changes in the financial markets and in ICT, new opportunities and competitive pressures have emerged in the global banking as well as the non-bank financial sectors. Today for example, the traditional banking model based on the acceptance of deposits and issuance of loans has declined significantly forcing banks to seek new opportunities and develop different business products. Most of the banking business is now dominated by information-based activities such as trading in new financial products and income generation through fees which are now a major source of profitability.

5.          While these changes are occurring faster in developed countries, I think its is fair to say that banks all over the world including those in East Africa, are striving to develop new instruments, products, services and techniques in order to remain profitable in this highly competitive environment. That is why, we as a Government, recognize the critical importance of this conference which brings together a high caliber of international professionals in the financial sector to share knowledge and best practices in banking and payments technologies for the benefit of our financial institutions and professionals. Over the course of the conference, I am confident that we shall learn a lot that can be of immediate application to make our banking sector more dynamic and position it to take advantage of the emerging opportunities.

6.          Let me also add that the focus of your conference is very consistent with the goals and objectives of the financial sector strategy that we are implementing in Kenya. As you may be aware, the Government is implementing Vision 2030 which aims to transform Kenya into a middle-income country providing a high quality of life to all its citizens by the year 2030. Our vision in the financial sector is to create a vibrant and globally competitive financial sector that will help generate the required savings to finance our huge investment requirements and create jobs. In addition, we aim to establish a regional financial services center to provide world class financial services. In order to achieve this vision, we must position ourselves at the frontier of knowledge and best practice in the banking and payments technologies. This is another reason why this conference is of critical importance to us.   

7.          As part of our financial sector strategy, we are also making every effort to make sure that financial services are available to all and especially the unbanked Kenyans who constitute over 50 percent of the population.  In this context, let me take this opportunity to commend those in our banking community and mobile phone companies who have worked so hard to put Kenya on the global map as a leader in the delivery of financial services through mobile phones. I am sure that their hard work and innovativeness will make this conference a true forum for knowledge sharing where others can also learn from us.

8.          Let me also point out that there is some misconception by some of us in Kenya and indeed in Africa, that mobile phone operators are unfairly competing with banks in the provision of low cost money transfer services. I am again pleased to note that the thinking in this conference is that, by combining their security systems and banking experience, banks can partner with mobile phone operators to tap their wide reach of customers, and thereby come up with unique services that go beyond the mere transfer of money.  I therefore expect that this conference will help to shape some of these debates in a manner that will help to exploit their comparative advantages for the benefit of customers and the economy at large.

9.           Ladies and Gentlemen, I am very much aware that in order for our banks to position themselves to take advantage of emerging opportunities and compete globally, governments in our region must play their part. With this objective in mind, here in Kenya, the Government has been implementing a comprehensive financial and legal sector reform programme to strengthen the policy, legal and institutional environment for the development of an internationally competitive financial sector. We have already passed the Communications Bill which will open the opportunities for e-commerce. To further provide a sound legal basis for payment systems in Kenya, we are already developing a National Payments System Bill that will help to promote safety, efficiency and effectiveness of payment systems in Kenya.

10.    Let us also bear in mind that these new innovations come with risks as the global financial crisis has painfully taught us. While African banks have been largely unaffected, one important lesson that we have learned from the unfolding crisis is the critical importance of a strong regulatory framework and effective supervision. To address this, were also amending our Banking Act to ensure that it is consistent with the international supervisory best practices as set out by the Basel Core Principles for Effective Banking Supervision. These are some of the reforms that we are undertaking in order to provide an enabling environment for our banking sector to innovate and maintain competitiveness while providing for the requisite risk mitigation measures.

11.    Finally, let me note that the benefits of these banking and payments technologies are even more if we implement them at the regional level because we can take advantage of economies of scale to reduce operating costs while at the same time reducing transactions costs by operating on a single uniform platform. This is a very welcome initiative because in the context of the East African Community, we are planning to establish a monetary union by 2012 and the lessons we take from this conference will enable us to think and act regionally for the benefit of our citizens.

12.     Ladies and Gentlemen, I do not want take much of your time for I can see that you have a lot in your schedule.  Let me therefore wish you all the best in your deliberations and take this opportunity to declare the Third Annual Banking and Technology East Africa Conference officially open.

Thank you all for your attention.