Record bank expansion strikes chord with savers

Business Daily

http://www.bdafrica.com/index.php?option=com_content&task=view&id=9837&Itemid=5812 Written by Washington Gikunju

Graphic illustration: Conrad Karume September 5, 2008: In possibly the most rapid take-off in the provision of financial services the world has ever seen, the number of Kenyans with bank and savings accounts tripled last year, from 3.3 million to 10.1 million. Banking industry players attribute the growth, which took place in the last 18 months, to aggressive marketing of credit, greater availability of banking facilities and the introduction of a series of new products targeting low-income groups. As a result, 27 per cent of Kenyans now hold accounts compared with nine per cent a year ago, according to the Central Bank. Such growth has represented a windfall for the country’s financial institutions, attracting the attention of foreign banks shopping for acquisitions in the market. Last year, for instance, Barclays Plc reported that its Kenyan subsidiary had realised the greatest profit growth of all its international operations. On the homefront, rising interest in the formal financial services sector among Kenyans in the low income bracket has sent operators rushing to cash in on the growth. This battle for control of the market saw the total number of bank branches increase from 575 to 740 in just 12 months, creating more than 8,000 banking jobs last year. More critical to those hunting for possible avenues of entry into the Kenyan financial market is that this boom saw total banking assets increase by 26 per cent to 951.2 billion, while deposits rose by 18 per cent to 705.2 billion, riding on the wave of robust earnings from trade and tourism as well as external donor inflows to non-governmental organizations and the Government. Total profits in the sector rose to Sh35.6 billion from Sh27.1 billion in 2006 and Sh20.6 billion in 2005. The CBK says new university graduates as well as the more experienced management, supervisory and clerical staff benefited from this jobs market expansion representing a 39 per cent increase to the 21,675 jobs that the industry had in the previous year. Banking industry statistics also show that this growth is driving a quiet maturity revolution that has seen the number of support staff decline to 292 from 1,102 in 2006. Business Daily graphics Industry players say the decline is due to the growing popularity of outsourcing support services in the last four years and the adoption by most players of technology-based methods of doing business. Access to financial services is seen as a key catalyst to overall economic growth because of its role in facilitating business transactions. CBK says that a financial access survey conducted last year revealed that 38 per cent of the adult Kenyan population lacked access to financial services because of the high cost of maintaining savings accounts and other barriers to entry. Yet access to financial services is seen as key to the achievement of the Vision 2030 development agenda that aims at making Kenya a middle income country and a regional financial services hub. Read more on this story from Business Daily, Kenya http://www.bdafrica.com/index.php?option=com_content&task=view&id=9837&Itemid=5812