[kictanet] Update on Pasha Centres

Tue Dec 7 14:53:34 EAT 2010

Dr Ndemo, thanks for that - very useful. For Co-op Bank, this makes a lot of
sense and if they work through the existing co-operative movement, they have
a lot more control and closer integration anyway. Same with the other two
banks that you cite: if they already have an extensive rural network, then
it's easier to extend it further. Call it risk aversion - or just call it
prudential growth: I have repeatedly heard in the past few months that the
number of fraud cases in the banking system has risen quite significantly.
I, for one, would like my bank to be very prudent about who and how they
grant access to their core banking system so that my accounts are protected
from unauthorised access.

This reversal of the roll-back of the branch system doesn't strike me as so
incomprehensible, by the way. I think there are two factors at play: the
transition from the Moi administration, and technology:

   - in the last years of the Moi administration, the economy became ever
   more sclerotic, and I guess (although I'd have to look it up) that the state
   borrowed more (given that donors were moe reluctant to back a corrupt
   regime, and tax revenues were held back by a stagnant economy). For banks,
   it's easier and cheaper to lend to government than deal with small retail
   clients. Makes business sense. Since 2004, GDP growth has accelerated, and
   there has been some fiscal consolidation. Both a good incentive to
   reconsider the lower end of the retail market.
   - Technology has made it a lot easier to administer smaller accounts, and
   mobile money has certainly played its role.

Lending through an agency network: I don't think it will necessarily be that
easy because a bank may make the disbursement through an agent, or mobile
money account, but still needs to do the whole credit evaluation - i.e check
an individual's creditworthiness and/or have securities and/or require
employment status and payslips and/or require guarantors etc. Again, this is
to protect people who entrust the lending bank with thei money, and it's
important not to confuse these principles of sound lending and banking with
the technology through which the loan is paid out and paid back. Any bank
that doesn't do this should have the CBK on its bank instantly, and
rightfully so.

SIM card registration: I've bored everyone sufficiently with my opinion on
this. The existing data base is not accurate, I am not sure what provisions
have been taken to update subscriber figures regularly, and I have spoken to
several people recently who have bought SIM cards and there was no mention
of registration.

On 7 December 2010 13:10, <bitange at jambo.co.ke> wrote:

> Andrea,
> Just talked to the Govenor on this issue.  He says they have licensed 4,000
> and are processing many more.  Some banks of course are more risk averse
> than others.  The Co-op Bank I know are working to develop their own DVs
> through their rural cooperative movement.  They only need us to provide
> connectivity.
>
> Two other banks with extensive rural network are also developing their
> rural model.  Some 10 years Banksd ran away from rural Kenya citing cost in
> running "small" accounts.  Today they are trooping back.  I cannot figure
> out this but I suspect Prahalad's work on the bottom of the pyramid.  I am
> aware some banks may leverage on mobile coverage to offer innovative
> products.  Lending of less than 10,000 will common within the next few
> months.
>
> From the recent UPU meet, it is made mandatory for each country to start
> working on the street addressing or GPS locationing systems.  Once this is
> done the Banks can safely lend.  This what Hernando de Soto's Mystry of
> Capital labours to explain.  A nother book that should be a mandatory read
> for all Kenyans.  And lastly you see why every mobile phone user needs to
> register.
>
> Ndemo.
>
>
>
>
> Sent from my BlackBerry®
>
> -----Original Message-----
> From: Andrea Bohnstedt <andrea.bohnstedt at ratio-magazine.com>
> Sender: kictanet-bounces+bitange=jambo.co.ke at lists.kictanet.or.ke
> Date: Tue, 7 Dec 2010 10:41:06
> To: <bitange at jambo.co.ke>
> Cc: KICTAnet ICT Policy Discussions<kictanet at lists.kictanet.or.ke>
> Subject: Re: [kictanet] Update on Pasha Centres
>
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