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"id": 3663,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/3663/?format=api",
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"type": "speech",
"speaker_name": "Mr. Kimunya",
"speaker_title": "The Minister for Transport",
"speaker": {
"id": 174,
"legal_name": "Amos Muhinga Kimunya",
"slug": "amos-kimunya"
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"content": "Madam Temporary Deputy Speaker, as we celebrate these reforms, Kenyans need to be patting themselves on the back. The world has just gone through a huge process; it started in 2008 with the collapse of some of the biggest banks that were termed “reputable”. They failed and some of them had to be bailed out expensively by the governments in the USA, the UK and elsewhere in Europe. Some countries ended up bankrupting their own economies; examples were in Iceland and Ireland. Those countries are still reeling from the effects of the banking failures that took place. In Kenya, we did not witness any of the banks failing despite the global recession. This shows that the reforms that have been put in place, especially from 2003, certainly under the Kibaki administration, have been working. Madam Temporary Deputy Speaker, Sir, part of the reasons for the failure of banks was political interference. We saw monies from public bodies such as the National Social Security Fund (NSSF) and the National Hospital Insurance Fund (NHIF) transiting through some of these banks. The money would be withdrawn and given out as loans or cash handouts to politically connected people; of course, these people were not expected to pay back the money. The long and short of it is that when you default in payment, the bank will collapse with all the money that the depositors have put in it. I must say that we must be happy that because this is not happening under the Kibaki administration, banks and public money have been saved. The best way of capturing these things in the future is looking at the best practices and anchoring them in the law. This is what I want to see happening; we should capture some of these things in the law, so that their existence is not based on the good behaviour of the Government of the day; they should be something in respect of which there is a law to protect things like deposits and ensure that everybody does the same thing consistently. Madam Temporary Deputy Speaker, Sir, the other thing that I want to mention is that, given the political turmoil that has been going on within the banking sector, the fact that most of the banks are still holding on is a credit to the Kenyan people. Even when they take loans, they honour their obligations. It is something that our people forget. They fear going to the banks to take loans because of what happened in the past, when they saw people’s properties being auctioned. By and large, Kenyan people are very creditworthy. I would like to encourage them, since this kind of insurance is coming into being. I hope that at some point in time, we will increase the amount of funds that will be covered beyond the Kshs100,000, so that we can encourage the culture of saving. More importantly, savings in a bank cannot grow the economy. I encourage people to borrow money, so that we can develop this economy, and because we know that people will continue meeting their obligations. We see this happening not just at the banks. Even at the very basic levels, within the Savings and Credit Co-operative Societies (SACCOS), people save little amounts of money, which are lent out to others. Even without providing security, people pay up their obligations, and the economy can grow. Madam Temporary Deputy Speaker, it is because of those little savings and borrowings that you see civil servants at relatively low levels owning buildings like Harambee Plaza. These are multibillion investments. This gives an indication of the potential that we have in this country in terms of mobilisation of savings and people borrowing. All they really need is the faith that comes with legal reforms in areas like the banking sector. We are creating this deposits insurance scheme within the law, but outside the Central Bank of Kenya, so that the sector can have its own way of doing things. It can intervene when some of the financial organisations get into problems. It should not just be looked at as a pathologist who comes in after the event and says: “Things are bad. We want to sell you and pay all the people.” It will come in to help in terms of holding the hands of these organisations as they grow. Madam Temporary Deputy Speaker, this is a straightforward matter. I am obviously very happy to see it come into fruition. It is a journey which started a long time ago. It is something that people have been expecting. I hope that the House will give this Bill maximum support, so that we can pass it and start the implementation process of the resultant law to give our people the protection they need for their deposits and, by implication, increase the confidence levels within our financial sector. With those words, I beg to second."
}