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{
"id": 14576,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/14576/?format=api",
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"type": "speech",
"speaker_name": "Dr. Oburu",
"speaker_title": "The Assistant Minister, Office of the Deputy Prime Minister and Ministry of Finance",
"speaker": {
"id": 194,
"legal_name": "Oburu Ngona Odinga",
"slug": "oburu-odinga"
},
"content": "Mr. Temporary Deputy Speaker, Sir, in 2003, the mandate of the Central Bank of Kenya (CBK) was expanded through the amendment of the Central Bank of Kenya Act to insert section 4(a) (i) (d) that gave the Bank the mandate of formulating and implementing such policies as to best promote the establishment, regulation and supervision of efficient and effective payment, clearing and settlement system. The CBK has embarked on strategies largely geared towards modernization of Kenya’s large value and retail payment system. Thus, following the above amendment, the CBK, in consultation with the Treasury and the Kenya Bankers Association, drafted and launched in September 2004, the National Payment System Framework and Strategy document to provide insight on Kenya’s payment system evolution and modernization roadmap. This document also provided a strategic roadmap whose implementation would see Kenya’s payment system attain international standards and further ensure that the country maintains a lead role in the region and remains a preferred investment destination for growth and development. Mr. Temporary Deputy Speaker, Sir, the CBK proceeded with the preparations for the introduction of a Real Time Gross Settlement (RTGS) system for the country in line with the East African Community Monetary Affairs Committee (EACMAC) directive in May 2002 which culminated in the launch of the Kenya Electronic Payment and Settlement System (KEPSS) in July 2005. Tanzania and Uganda had earlier implemented their RTGS systems called Tanzania Inter-Bank Settlement System (TIBSS) and Uganda National Inter-Bank Settlement System (UNIBSS). The implementation of KEPSS helped phase out the previous paper based inter- bank settlement system and transformed the management of liquidity in the country’s banking industry. Further, the Government recently enhanced the use of this safe large value payment system through the implementation of the Value Capping Policy. Value Capping limits the value of cheques and the EFTSS going through the clearing house to Kshs1 million and below. The policy dubbed KEPSS usage by the public, today, the system processes an average of about 4,500 transaction messages per day with a corresponding daily average value of about Kshs70 billion compared to the pre-value capping implementation level of Kshs50 billion and approximately 2,500 transaction messages per day. This translates to settlement of over 60,000 transaction messages with a value of over Kshs1 trillion per month. Mr. Temporary Deputy Speaker, Sir, the emergence of the innovative mobile phone money transfers has put Kenya on the world’s payment system map particularly with the launch of Safaricom M-Pesa mobile phone money transfer service in March, 2007, Zain’s Zap which has now been translated into Airtel Mobile phone money transfer service in March, 2009 and Essar’s Yu cash mobile money transfer service in December 2009. Mr. Temporary Deputy Speaker, Sir, the success of these retail payment products has positively impacted both sides of demand and supply for retail payment services leading to a surge in the number of applicants seeking authority to roll out such value added payment products. It is notable that the mobile phone-based money transfer services have greatly enhanced access to financial services, which is one of the key objectives of the Government. I wish to indicate that these low value payment systems, including the payment card industry, continue to register remarkable growth. It is, therefore, evident that our country’s national payment system is a critical infrastructure through which the economy functions. One of the core principles of Systematically Important Payments Systems (SIPS) by Bank of International Settlement (BIS) requires that payment systems should have a well founded legal basis. However, while Section 4A(1)(d) of the Central Bank Act provides the Central Bank of Kenya (CBK) with a broad policy formulation and implementation mandate over the country’s payment system, the Bank requires enhanced powers to effectively oversee the country’s payment system. Mr. Temporary Deputy Speaker, Sir, therefore, there is an urgent need for us to put in place legislation on the national payment system to enforce the CBK’s oversight mandate over the wide spectrum of payment systems in order to enhance the safety and efficiency of the country’s payment system that has witnessed increasing technology- based innovation and sophistication in the last five years. The principal object of the National Payment System Bill, 2011, is to provide for the regulation and supervision of payment systems and payment service providers. This will enable Kenya’s payment system to comply with the BIS core principles as well as the CBK’s responsibilities as recommended by the BIS while at the same time giving the CBK specific enhanced powers over payment systems in Kenya. Mr. Temporary Deputy Speaker, Sir, allow me to give some highlight on the parts of the Bill. Part I of the Bill deals with the preliminary matters focusing on the Short Title, the commencement date of the Bill and interpretation of the terms used in the Bill, whereas Part II of the Bill provides for the procedures for designation of payment systems and instruments. Part III of the Bill provides for the recognition of the management body of a designated payment system, settlement, clearing and netting agreements and rules; and the procedures for authorisation of payment service providers, application for authorisation, renewal of authorisation and revocation of such authorisation. Mr. Temporary Deputy Speaker, Sir, Part IV of the Bill provides for the regulation and supervision of the designated payment systems and instruments. The last Part of the Bill – Part V – which covers Clauses 25-33, contains miscellaneous provisions relating to the utilisation of assets of a designated payment system participant, retention of records, use of confidential information for personal gain, priority of certain instruments on winding up, prohibition of misleading advertisements, relief from prosecution, regulations and guidelines, and transition and savings. With those remarks, I beg to move and request hon. Kimunya to second the Bill."
}