Highly Developed Financial Sector
| Kenya's financial system is among the more developed in Sub-Saharan Africa, with a large banking sector that includes more than 40 commercial banks; it is supervised by the Central Bank of Kenya. International players like Barclays have long been active in Kenya’s banking sector. |
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oncerning capital markets, the Nairobi Stock Exchange (NSE), supervised by the Capital Markets Authority, lists around 50 companies, including many financial companies and industrial firms.
The insurance sector in Kenya is beginning to develop, and includes more than 40 licensed companies and two reinsurers. The insurance sector is regulated and supervised by the Commission of Insurance within the Ministry of Finance.
In partnership with the IMF, the World Bank completed a Financial Sector Assessment Program (FSAP) in the second half of 2003 which identified potential vulnerabilities and developmental needs for the sector as well as current threats to macroeconomic stability. The World Bank has also completed a Financial and Legal Sector Technical Assistance Project, which aims to strengthen the financial sector’s legal framework.
The Central Bank has promised a tight monetary policy, low inflation and market-driven interest rates. Effective budget control, establishment of realistic measures against government corruption, faster progress on privatization of major parastatal companies and repeal of legislation controlling bank interest rates are still top priorities. Nevertheless, this resource-rich country remains very attractive to investors and the major portion of Kenya’s US $6.5 million debt is privately financed.
One cause for hope is the outstanding performance of Kenya’s micro-enterprises, most of them run by women in rural areas. The Kenya Women Finance Trust Ltd. (KWFT), the country’s only micro-finance institution for women, has been a true success story, growing from a very small organization in 1981 to a thriving, world-class institution with some 100,000 members that achieved overall sustainability in 2002. The Ford Foundation and other international organizations have taken note, supporting the KWFT’s efforts. The KWFT’s guiding principle is “the belief that women can transform their lives, those of their families and the way the world works through entrepreneurship.” The organization also proves the potential that Kenya offers and the great resource the country’s hardworking entrepreneurs represent. |
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| UAP Insurance |
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AP Insurance, the first ISO 9001- certified insurance company in Kenya, managed to maintain growth even while the Kenyan economy was in recession, and now that Kenya’s GDP is on the upswing, UAP is expanding rapidly. “Our shareholders’ funds increased by more than two and a half times in four years to over 1.8 billion KSH in 2004. This represents a solvency margin of over 270%, which is 18 times more than the statutory minimum of 15%,” says James Muguiyi, Managing Director. UAP has made a long-term commitment to Kenya and aims to serve as an example to other companies operating there. “We believe that observing the highest ethical standards will attract more like-minded people and organizations and ensure the long-term survival of our business,” Muguiyi says.
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James Muguiyi Managing Director
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“We can work together to build a better Kenya.”
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As for the future, UAP plans to offer new products and services in Kenya as well as continue to expand beyond the country’s borders. Muguiyi explains, “We shall continue to research and develop new and exciting products and insurance solutions in both life and general businesses that will create value for our stakeholders. In addition, our company aims to be a leading provider of financial services in Africa, and we will continue to look for more opportunities elsewhere in the region.”
Muguiyi is very hopeful about the future of the Kenyan economy and about UAP. He predicts declining inflation; lower interest rates and a relatively stable exchange rate as well as an increase in private sector credit extension and firmer global commodities prices. UAP is positioning itself to take advantage of these opportunities. To potential partners in the US Muguiyi says, “ We are a very transparent company that is very focused and takes pride in its corporate governance. We welcome technology transfer as well as strategic alliances with American investors and companies. We can work together to build a better Kenya.” |
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