NAIROBI (Xinhua) --
Kenya’s banking industry lobby on Thursday
decried the country’s low savings rate.
Chairman of the Kenya Bankers Association (KBA), told a banking
forum in Nairobi that the levels of domestic savings which is
estimated at an equivalent of about 10 percent of gross domestic
gross (GDP) remains low, compared to total investments of about
17 percent of GDP in 2017.
“This means that to
some extent, we rely on foreign savings to finance our
investments. While that in itself is not a bad thing, we need to
continuously explore how we can enhance the ability to mobilize
more savings,” Oigara said during the opening ceremony of the
KBA Seventh Annual Banking Research Conference.
The two-day event
aims to explore credit market issues in the context of a dynamic
regulatory environment that seeks to promote stability and
growth amidst new market players and a technologically-enabled
way of operation that presents both opportunities and risks.
Oigara said the
banking industry remains upbeat in regard to opportunities that
the economy offers and is ready to continue financial
intermediation in a manner that supports the economy’s growth
He noted that being
optimistic is by no means an indication that the banking sector
does not appreciate the challenges that constrain the ability to
optimally offer credit and mobilize savings.
economic growth of about five percent in 2017 is positive and
higher that the Sub-Saharan Africa average at 2.8 percent, it is
my view that we are performing below our full potential,” he
KBA is currently
pursuing a number of key initiatives meant to promote resilience
and growth in the banking sector.
“One is the
compelling need to invest in analytical capability to use the
rich information pool that banks have so as to innovatively lend
to segments hitherto considered risky, but which in reality are
disenfranchised because they are less understood,” Oigara said.
He observed that the
sectors considered risky by lenders include agriculture,
low-income households and micro small and medium enterprises and
by understanding them, and then availing credit to them, the
financial sector will go one step forward in removing them from
their low-income, small size traps.
The banking sector
is also keen to increase its loans to the agriculture sector.
The chairman said that the agricultural sector is a key sector
of the economy whose share of credit is presently far below what
KBA CEO Habil Olaka
said that as government directs funding to the agricultural
sector in order to de-risk the sector, financial institutions
can invest in organizing small-holder farmers as enterprises
with sufficient levels of capitalization that can enable them
access credit like other segments.