{"doc_id": "0a872a3f6600a5bfe9b9b6f189923d8d", "text": "CENTRAL BANK OF KENYA\nIMPACT INVESTMENT FORUM: AFRICAN RURAL AND AGRICULTURAL CREDIT\nASSOCIATION (AFRACA) 4OTH ANNIVERSARY\nKenya School of Monetary Studies, Nairobi\nKeynote Address by Dr. Patrick Njoroge\nGovernor of the Central Bank of Kenya\nNovember 21, 2017\nAs Prepared for Delivery\nLadies and Gentlemen,\nGood morning! Forty years is a milestone. Some argue that it is when middle age\nbegins – you look back fondly at the things of your youth, but also look forward to\nusing your experience and wisdom to achieve long-held goals. I am thus glad that you\nwelcomed me to your birthday celebrations, and allowed me to share in such a\nsignificant moment.\nIn 1977 the African Rural and Agricultural Credit Association (AFRACA) was created\nin response to a request made to the United Nations Food and Agriculture Organisation\n(FAO), during the 1975 World Food Conference. This request, was that FAO assist\ndeveloping member countries establish Regional Agricultural Credit Associations\n(RACAs). The purpose of this RACAs was to promote cooperation and facilitate\nmutual exchange of information and expertise in the field of rural finance.\nSome background research into AFRACA unearths a number of gems that indicate that\nyou have been at the forefront in driving the Rural and Agricultural Finance Agenda in\nAfrica. You have had, and continue to have, a strong desire to turn regional diversity\ninto a powerful driving force and catalyst for exchange, capacity building and\ncooperation to promote rural finance. I am deeply honoured to be part of this campaign\nto revolutionize finance for African Agriculture. And we have something in common,\nfor we at the Central Bank of Kenya, share a similar vision, “of a rural Africa where\neveryone has access to sustainable financial services that support economic\ndevelopment, while maintaining social and environmental balance”. That said, the task\nis enormous—nearly two-thirds of Africa’s population depend on agriculture for their\nlivelihood and the sector contributes over 40 percent of the continent’s GDP.\n1\n\nI am very pleased today to be part of this first Impact Investment Forum\ncommemorating AFRACA’s 40th anniversary. The theme of the conference “unlocking\nprivate sector capital to scale up impact investments in African agriculture” promises\nto be a story of shifting the reality of agricultural finance as we know it today. Africa\nhas in the past relied largely on Official Development Assistance and domestic public\nfunding to address socio-economic challenges, many of which have few market-based\nsolutions. We all know that these traditional funding flows have been on the decline\nover the last decade; and this is at a time when huge resources are required for\nimplementation of the Sustainable Development Goals (SDGs) as well as the African\nUnion Commission’s 2063 agenda and individual national goals. But as these\ntraditional public funding decline, private financial flows have grown —from 63\npercent of total external resources in 2002-06 to over 70 percent in 2010-14. For the\nAfrican governments to achieve the noble aspirations enshrined in the SDGs, and the\nAU agenda into realities on the ground, they will need to adopt innovative ways to\nleverage on the rising private investment to fill the large projected financing gap.\nThis Forum’s focus is on Impact Investment in the context of the agricultural sector;\nand this is a sector whose importance in our economies cannot be over-emphasized.\nApart from its GDP contribution, critical is the high concentration of the poor and\nthose who are financially excluded in rural areas. Many of us engage in agriculture\neven as we live our lives in the city. Most of us, let’s be honest, plan to retire to a life\nof agriculture, as many have done before us. The efficiency of agriculture is thus of\nvital, and personal, importance to us. Of more importance to central banks is managing\nthe volatility of food prices. Concerns about price volatility have a huge effect on\nbusiness decisions and investments. Modernizing agriculture is critical to managing\nthis risk and finance is at the centre.\nDespite the great strides made by the African banking sector in digital financial\nservices, the typical offer for financial products and services for the actors in the\nagricultural sector has been limited. Most agricultural investments, and impact\nenterprises, in particular, find it challenging to obtain capital from the commercial\nbanking sector due to a number of constraints.\n2\n\nAlthough Impact Investments are identified today as constituting one of the more\npromising approaches to the funding of inclusive and green businesses, the field of\nimpact investing is also relatively young. As such, many undertakings have not had\ntime to mature and demonstrate results. There is also a lack of awareness and\nunderstanding among banking practitioners on the peculiarities of impact businesses.\nSo, what strides has Kenya made towards developing market-based solutions to\naddressing environmental and social challenges? The Kenya Bankers Association\n(KBA) and the Nairobi Securities Exchange (NSE) partnered with market players to\nfast-track the Kenya Green Bonds programme. Kenya’s green finance initiative was\nstrengthened during the United Nations Conference on Trade and Development\n(UNCTAD) that took place in Nairobi in July 2016. To progress the initiative, KBA-\nNSE organized a banking industry engagement where the Climate Bonds Initiative\n(CBI) shared global experiences and a Green Bond Working Group (GBWG)\ncomprising of market players was formed. The Kenya Green Bond guidelines are\nbeing finalized in line with international best practice.\nThese efforts towards actualising the green finance market in Kenya come in the\nbackground of progress in development of the domestic debt market, which I believe is\nimportant to catapult the green bond market in the country. The measures we have\nundertaken are aimed at lengthening the maturity of the debt, diversifying the investor\nbase and developing a vibrant secondary market to achieve a reliable benchmark yield\ncurve. Developing the capital markets has been a dynamic process that has involved\nregulatory reform, strengthening financial sector regulators and improvements to the\nmarket infrastructure including payment and settlement systems.\nKenya is ripe for green investments. The stable macroeconomic and market\nenvironment coupled with economic diversification and stability of the currency are\njust but a few strengths that demonstrate our capacity. Capital market investors can\nleverage on the digital transformation story and success in financial inclusion to enter\nthe market.\n3\n\nAs I conclude, ladies and gentlemen, I would like to thank AFRACA and the World-\nWide Fund for Nature (WWF) who have convened this first Impact Investment Forum\ntargeting financial institutions in Africa. I am glad to learn that one of the main\nobjectives of the conference is to leverage on the knowledge of the great minds\ngathered here to create more awareness and understanding on the concept, with the\noverall goal of shifting Impact Investment Funds to agriculture.\nWe are very keen to encourage practices that promote inclusive and sustainable\nbusinesses. This discussion is supportive of this. I wish you a very fruitful Conference\nand look forward to the action points for moving this topic forward as AFRACA\nmarches on.\nI thank you for your attention, and wish you a happy birthday.\n4", "source": "CBK", "stratum": "cb_requests", "fetch_date": "2026-04-26", "url": "https://www.centralbank.go.ke/uploads/speeches/1706010934_Governor's Remarks - AFRACA 40th Anniversary APD.pdf"}