Financial Sector Profile

Kenya’s financial sector is experiencing growth with the Banking Sector registering 20% after tax profit increase in 2012. The country currently has 44 Banks, 2 credit reference bureaus, 109 licensed Foreign Exchange Bureaus, 45 Insurance Companies and 2 Re-Insurance companies. Of the 44, 31 are locally owned and 13 are foreign owned. 3 of the locally owned Banks have significant shareholding by the Government and State Corporations, 27 are commercial banks and 1 is a mortgage finance bank.

Characteristics of the sector

  • 31 indigenous banks and 2 credit institutions
  • Banks represent over 90% of the sector’s assets
  • Supported Savings And Credit Cooperatives (SACCOS) have the highest number of institutions in the sector
  • Commercial banks and building societies are subject to the most regulation, while MFIs and SACCOs are less regulated.
  • Approximately 2.5million people use the SACCOs’ basic transactional and savings services

Current situation of the sector

The Finance sector of Kenya is experiencing both high and low ends. There has been a general decline in demand for credit owing to political risks in the first quarter of 2013 as the country went through elections. The remittance inflow in March 2013 increased by USD 1.021 million (or 1.0 percent) higher than the February 2013 inflow of USD 102.4 million. In the 12 months to March 2013, average remittance inflows increased to USD 98.3 million from USD 82.9 million. The Banking Sector registered improved performance as at 31st March 2013 with the size of assets, loans and advances.

Nairobi Stock Exchange
The Nairobi Stock Exchange (NSE) is the principal stock exchange of Kenya. It has continued to successfully enable idle money and savings to become productive by bringing together borrowers (issuers) and lenders (investors) of money at a low cost. By May 2013, the Kenya stock market was up by 35%.

Capital Markets Authority
The CMA plays a critical role of facilitating mobilization and allocation of capital resources to finance long term productive investments in the economy. The authority is aiming at creating better access to capital markets, raising savings and investment rates and raising stock market capitalization. As part of the Vision 2030, Capital markets Authority wants to engage in bond market reforms and developing new products and services.

Challenges in the Financial Sector

  • Instability in financial markets
  • Slow economic recovery in response to external shocks and structural challenges within the economy.
  • Rapid depreciation of local currency
  • Rising inflation
  • High interest rates
  • Dry up of capital markets
  • Steep rise in crude oil prices
  • Effects of drought and uncertainty in the economy

The information under the financial sector of Kenya is organized as below;