THE PRIVATE SECTOR PERSPECTIVE TO FINANCIAL INCLUSION

PRESENTATION BY NAOMI NDELE 20TH JULY 2017

KCB - Our History

KCB, Eastern Africa’s oldest and largest commercial bank started its operations in Zanzibar as a branch of National Bank of India

The Bank extended its operations to Nairobi, which had become the Headquarters of the expanding railway line to Uganda

Grindlays Bank merged with the National Bank of India to form the National and Grindlays Bank which upon independence was to spearhead the economic empowerment of local citizens

The Government of Kenya acquired majority shareholding and changed the name to “Kenya Commercial Bank”

1896 1904 1957 1970 1972 200319971988 2007 2008 2012

In order to provide wide scale access to home ownership, the bank acquired Savings & Loan (K) Ltd, the largest specializing mortgage finance company

The government sold 20% of its shares at the NSE through an IPO that saw 120,000 new shareholders acquire the bank

The Bank resolved to spread its operations to various viable markets in the region starting with Tanzania that now has 12 branches

The Bank ventured into Rwanda opening 11 branches to date. KCB witnessed a major milestone with the Implementation of a new core banking systems, T24. The system enabled the bank to offer services on a one-branch banking network (every branch is your home branch) across all 5 countries

KCB completed its Eastern African Regional presence with the opening of KCB Bank Burundi and doubled its share price in the bourse surpassing the USD 1 Billion capital ratio and an impressive growth of 11% in its books

KCB extended its operations to Uganda in order to provide the 3 East African countries with the ability to bank across borders especially for trading partners

In pursuit if its vision, the bank rebranded to KCB Bank Ltd with a broad reaching internal and external program including sponsorship of the various Eastern Africa rally series

2013

The Bank was awarded a long-term GCR credit rating of AA (Outlook: stable); enhanced Bancassurance Business and launch of KCB Mbenki

2014

KCB in its 119th year anniversary posted a record KShs 23.8 Billion profit before tax for FY2014; ranked as Best Bank in Kenya by Euromoney; launch of Islamic Banking products; EMV Migration; launched 3rd Sustainability Report; Biashara Smart Launch

2015

Our Philosophy

Geographical footprint

Group Operations

Personal banking

Business banking

Banking Borrowing Investing

Micro banking

SMEs

Agri banking

Corporate banking

Investing

Overall Employment

Wage Employee…

Self-employedandunpai…

Informal Sector…

Wage Employees

Self-employedandunpaidfamily workers

Informal Sector

TOTAL PRIVATE SECTOR,

1,817, 71%

TOTAL PUBLIC

SECTOR , 737, 29%

TOTAL PRIVATE SECTOR TOTAL PUBLIC SECTOR

Formal SectorThe Environment

Manufacturing2,710 20%

Construction 3372%

Wholesale and Retail Trade, Hotels and

Restaurants 7,947 60%

Transport and Communications

417 3%

Community, Social and Personal

Services 1,293 10%

Others 605 5%

Manufacturing Construction

Wholesale and Retail Trade, Hotels and Restaurants Transport and Communications

Community, Social and Personal Services Others

Informal Sector

Source: FSDK 2016 & IFC/World Bank 2013

Registered MSME in Kenya

1.03m

Registered

MSMEs in

Kenya

60%

MEN

40%

WOMENHave Bank

Loans <25% Do Not

Have Bank

Loans …

~300-400,000 Active

Registered

Enterprises

LLC:

45% Sole

Prop.:

55%

Ownership Structure

LLC:

45% Sole

Proprietors

55%

Market Opportunity & Penetration

LLC:

45% Sole

Prop.:

55%

LLC:

45% Sole

Proprietors

55%

Market Opportunity & Penetration

The Missing Middle:-• Over 17M unregistered entrepreneurs• 11M small holder farmers• Women• Youth

Financial inclusion and formalizing the informal sector:-• Technology• Capacity building and imparting business development

skills• Market linkages• Angel and patient investors

OTHER SOLUTIONS

Interventions and Solutions

Savings Solutions

Networking opportunities

12

Skilling our Youth for Self-Employment

Equip 10,000entrepreneurs with technical and business training

‘Jump started’ enterprises for beneficiaries

Supported new start-up enterprises for beneficiaries

Skills AcquisitionSkills Enhancement

Asset financeStart-up Capital Working CapitalManagement support

Market linkagesGrowth support

Viable youth enterprises with an established customer base

Sustainably growing enterprises that are creating jobs and wealth

INCEPTION INCUBATION MATURITY

Requirements

Expected Result

Requirements

Expected Result

Requirements

Expected Result

‘Angel’ Investors ‘Patient’ InvestorsEarly-Stage Growth

Established Resource BaseLate-Stage Growth

•2,234 students were enrolled in the pilot phase across 20 counties

• Unavailability of audited accounts

• Complex accounting procedure

required as per the market standards

• Lack of accounting/financial

management skills by the entrepreneurs

• High cost of hiring or accessing qualified accountants and professional services

• Costly accounting systems/ software e.g. quick books

Challenges Facing MSMES

• Simplify the accounting model/framework to accommodate the missing middle

• Consider reduction of charges for professional fees.

• Create forums for capacity building

and training on finance management

for small and medium entrepreneurs

• Provide technical assistance to the

unskilled and informal sector

• Digitize the accounting solutions

Recommendations

THANK YOU