“Wrong banking structures and economic policies have widened the gap between the banking sector in Africa and Asia”, said Lamin Manjang, the Chairman of the Kenya Bankers Association in an interview with Christopher Garnett, Senior External Advisor at the Euromoney Kenya Conference 2017.
According to Mr. Manjang, Kenya and Africa at large have a number of lessons to learn from the Asian economy to be able to transform the banking sector; political stability, good governance, good financial-economic policies and industrial investments.
A financial sector that’s not performing has a negative impact on the general economy; hence, sound financial services are critical for an economy support.
The competitive landscape has changed in the banking sector. Mr. Manjang pointed out that the Kenyan banking system is very competitive with 41 banks which are divided into two sections, TA1 and TA2; it’s a dynamic banking industry and is quite large in terms of the players. This has led to the acquisition of four banks in the industry creating stronger balance sheets.
Trends from the year 2012 to the year 2016, the interest rates have been declining from 23 percent to 17 percent. Even with this, the banks have been adamant in adapting to the law bills. According to Mr. Manjang, the banking industry law bill came to play in 2016. He said that looking at the economy over the two decades it has been a free market economy with the foreign exchange and the interest rates making it a vicious cycle.
The banking system in the country has had a lot of challenges which have seen banks close and people lose jobs, if well addressed the banking industry will flourish. “Lowering the interest rates would encourage access; lending and clients will be able to have access to credit,” said Manjang
Banking has a rich heritage and over time this has led to the banking system being customer centric leading to the road towards digital finance.