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High inflation and high interest rates remains a major problem in EAC, says senior Kenya official

By Njeru Githae

We need policies that will give us a stable and low inflation rate, so that we can get back to a level that we have been used to, a single-digit inflation rate. If we do not, all the gains that we have achieved so far are likely to be eroded.

The second priority is interest rates. Again, if you look at the region you will find out that interest rates over the past four months have increased to levels which are unsustainable, and I think we need to come up with policies which will ensure that we get low and stable rates, because the swings in the interest rates do not help businesspeople to plan. They also do not help government as they make borrowing costly.

The third priority is a stable exchange rate. Again, if you look at the region, you find that over the past four months there were swings in the exchange rate. This also has an effect on inflation, so in my view we need to come up with policies to stabilize the exchange rate, important because all these countries import significant quantity of fuel.


Then, the fourth policy decision that we need to make is how we can attain a sustained (inclusive) and high growth rate. You find that although the growth rate is high, especially in comparison to the euro zone, we need to increase it in the long run along with increased per capita growth.


 

Invest in Africa and Africa’s capital markets, senior World Bank official urges investors in London

By EA Trade Review Team

The World Bank called Thursday from the London Stock Exchange (LSE) for investors worldwide to invest in Africa and its budding capital markets.

“Africa has taught the world a lesson in macroeconomic reform and stability,” World Bank Vice President for Africa, Obiageli (Oby) Ezekwesili she told an African Investment Summit hosted by the LSE.

She urged investors who are in search of the right market at a time of growing fears of a global recession to “rediscover Africa”.

“Africa’s fundamentals appear strong, and the continent’s outlook remains positive,” she said pointing to the continent’s rapid rebound from the 2008-2009 global financial crises and its higher GDP growth rates projected to be 4.8 percent, 5.2 percent and 5.5 percent respectively in 2011, 2012 and 2013.

 

Financial reforms in Kenya successful but more needs to be done, says CBK.

By Prof Njuguna Ndung’u

Over the 5 years of the Financial Sector Deeping (FSD) Kenya’s operations, Kenya’s financial sector has witnessed a major transition, from adequate reforms, allowing space for innovative solutions, to dynamism and growth. FSD Kenya contributed a fair share of this transition and understanding.

Financial inclusion lies at the core of the Central Bank of Kenya’s reform agenda to support Kenya’s development blueprint, vision 2030.

This is because financial inclusion has the potential to lift people from poverty through savings and affordable credit.

More importantly, financial inclusion brings Kenyans to the market and so deepens the market and creates economies of scale. Cost of financial services will decline.

This is what FSD has supported as well. A developed and deepened financial sector finances development and allows an effective transmission of monetary policy decisions.

 

CBK and FSD Kenya enjoyed cordial and fruitful relations during the first phase of FSD Kenya’s operations.

The results of the FinAcces Surveys in Kenya have become the goal standard for measuring the level of financial inclusion and financial access in the country. They have also informed the design of appropriate policies to curtail financial exclusion.

 

Look for alternative security for loans, minister challenges commercial banks

By Uhuru Kenyatta

As envisaged in Vision 2030, the financial sector has a critical role to play in accelerating the transformation of our country into a rapidly industrializing middle-income nation by the year 2030.

The target is for the financial sector to accelerate savings and investment to 32 per cent and 35 per cent of GDP, respectively.

A vibrant and globally competitive financial sector promotes high-levels of savings and assures financing for Kenya’s investment needs.

It will also accelerate Kenya’s aspiration of becoming a regional financial services centre. In this regard, we will facilitate legal and institutional reforms to make Kenya more competitive.

Lack of access to finance remains one of the main factors limiting private sector growth, especially in Sub-Saharan Africa where 80 per cent of the private firms having no access to credit, while the remaining 20 per cent complains about its cost.

 

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