(Non) Banking Challenges in Kenya

In an interview with the Financial Post, Kenya Commercial Bank’s Chief Executive Terry Davidson lists the four main challenges facing the banking sector as:

(i) Uncertainty over the Banking Bill: Implementation of the “in-duplum” rule, which, if applied retroactively for several years back will wipe out many local Banks.
(ii) Infrastructure: the expensive and poor conditions power, roads and communications needs to be addressed – this will reduce the cost of banking and eventually lead to banking costs for account holders
(iii) Insecurity: KCB spends Kshs. 15 million a month on security guards, which is not prudent. If the security situation improved, Kenyan banks would not have to pay as much for security.
(iv) Judiciary: It takes years for cases to be heard, and all banks have backlogs of pending cases, while others are postponed endlessly.

Bookmark and Share

4 thoughts on “(Non) Banking Challenges in Kenya

  1. Anonymous

    “In-duplum” does not make sense since it only encourages defaulters! Basically, if I accumulate enough (unpaid) interest to equal my original loan, why would I even want to pay it back since after Interest=loan the loan is interest-free! Those in favour of the rule should lend me money!

    The high cost of borrowing is also a function of poor/slow court system where banks spend more to clooect the loans than what they make in interest! So they tack on a higher margin for good borrowers.

    Costs to keep cash safe e.g. guards, vaults, etc add to fees charged by banks! I saw bank branches in supermarkets in the UK – which cost less to build & maintain than the banking centers in Kenya.

    ATMs use phone lines which are difficult to obtain coz of Telkom’s inefficieny & expensive! Calls in the UK cost less than 7pence – depending on the deal you get. In Kenya, it costs much more!

  2. bankelele

    re in-duplum: credit cards charge way more than anyone, and no one complains because it is accepted for what it. it’s not fair to limit banks especially since it is a willing informed borrower who signs the agreement.

    agreed on the court system, security and telkom costs.

Comments are closed.