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T
he journey towards becoming a globally
competitive and prosperous country is anchored
on radical and holistic transformation of
the country’s social, political and economic
structures. However any significant steps to be made
on this front are heavily hinged on independent factors
such as macroeconomic stability, continued governance
reforms and infrastructural development, innovation and
technology enhancement among others.
To attain middle income status, Kenya needs to be
experiencing unprecedented economic growth at a rate of
10 percent annual growth every year until 2030. Since the
launch of the ambitious action plan, almost 8 years ago not
once has the country registered growth in close proximity
to the set target and with just 15 years to go it is evidently a
race against time.
However falling short of the blueprint projections
shouldn’t sweep under significant notable strides made by
the country. A Bloomberg Report for 2015 placed Kenya as
one of the fastest growing economies ranking at 3rd
place
just behind China and Indonesia with growth estimates ex-
pected to exceed 5 percent. Though the statistic is an indi-
cator of propitious times that lay ahead, economic growth
doesn’t necessarily translate to improved living conditions.
The extent to which growth reduces poverty levels is
solely dependent on the degree of involvement by those on
the lower end of the socioeconomic structure. Moreover it
is an obligatory requirement of Millennium Development
Goals whose number one goal is eradication of extreme
poverty and hunger.
Vision 2030 master plan clearly elucidates specific
sectors of the economy that bear the greatest responsibility
in aiding the country through the transition to middle in-
come status one of them being tourism.
Fortifying economic
drivers to achieve full
industrialization
It is 7 years since the launch of the country’s development blueprint Vision 2030, a master plan that was
conceived with an objective of guiding Kenya on the road towards an economic prosperous future.
By George Wainaina
16 | THINK BUSINESS • OCTOBER 2015
ANALYSIS
Tourism
Hitherto, tourism was one of the main non-agricul-
tural foreign exchange earners, a vital source of revenue
that is being hampered by a wave of security threats leading
to decreased numbers of tourist arrivals.
Recent statistics from World Travel and Tourism Council
indicated that last year Kenya’s tourism and travel sector’s
direct contribution to the GDP stood at 4.1 per cent which
translates to Ksh 220.6 billion. The report further high-
lights that total contribution by the tourism industry to the
GDP was at Ksh. 561.8 billion which accounts for 10.5 per
cent of the Gross Domestic Product. By 2025 it projects that
the tourism industry will be experiencing annual growth of
5.1 percent every year in the coming decade.
For this to happen there is need for increased facil-
itation and infrastructural development to help surge the
numbers. Despite having a similar tourist attraction capac-
ity as Malaysia , Kenya is grappling with 1.8 million visitors
whereas the latter boasts of having numbers to the tune of
30 million.
An action plan under the Ministry of Industrialization
and Enterprise Development clearly shows that the gov-
ernment is cognizant of the fact that despite the vulner-
ability associated with the sector, efforts geared towards
increasing the industry’s competitiveness and developing
the value proposition for the visitors. Under the MOIED
blueprint it has plans to fully capacitate tourist parks in the
country since currently 7 out of 26 parks receive 80 percent
of the total number of visitors.
Agriculture
By the year 2030, Kenya hopes to promote an inno-
vative, commercially oriented and modernized agricultural
sector. It hopes to achieve this by transforming key insti-
tutions in the agricultural and livestock sector to improve
quality and enhance productivity.
Today agriculture still remains the undisputed for-
eign exchange earner with more than half of Kenya’s ex-
ports related to agriculture like tea and horticulture.
During the launch of the MOIED (Ministry of Indus-
trialization and Enterprise Development) cabinet secretary
Adan Mohammed emphasised on the need to increase our
agricultural exports and attach identified opportunities in
agro-processing that build on the vast agricultural poten-
tial.
Tea is a staple of Kenya’s exports raking in over US$1
billion annually and this happens without any value ad-
dition since 97 percent of the commodity is exported in
bulk form. This is replicated across the agricultural sector
with only 16 percent of all exported agricultural output un-
dergoes processing. This is in contrast to our East African
counterparts Tanzania and Uganda where they process 27
percent and 34 percent of their agricultural exports respec-
tively.
In the industrial blueprint it notes that the country
can attract a 50–100 percent price premium by promoting
“Made in Kenya” brands internationally with a feasible po-
tential to attract US$ 200 million in value addition and cre-
ate an extra 10,000 jobs.
Alike when it comes to processing of our agricul-
tural exports, doubling of the quantities being processed
could earn a further US$ 600 million and put an additional
110,000 people under employment.
Textile and apparel
Since the signing of the African Growth and Opportu-
nities Act in 2000, textile and garment export have grown
to roughly US$ 415 million. The act has been successfully
extended for another 15 years making this the opportune
moment to leverage on the opportunity to increase our ex-
ports.
Despite having an advantage over other low-cost
countries in the partnership, Kenya accounts for only 0.4
percent of the US$ 84 billion American textile market
whereas nations like Bangladesh that are 9 times more ex-
pensive than Kenya commands 6 percent of the US market
share.
Leather
Kenya has one of the largest livestock herds in Africa
approximated at 60 million heads and though it has a well
established leather sector it remains underutilized. In this
sector the issue of unfinished exports prevails again since
90 percent of Kenya’s US$ 94 million leather exports are
unfinished wet blue leather. Facilitating for processing of
finished leather and leather goods would create an addi-
tional 35,000 jobs and inject a further US$ 150- 250 million
to the GDP and also contribute to substituting a portion of
the US$ 86 million in shoe imports yearly.
Wholesale and retail trade
The 2030 blueprint envisions an empowered informal
sector that is able to raise earnings by being granted the
opportunity to transform itself into a part of the informal
sector by increasing efficiency by reducing constraints be-
tween consumer and the producer, diversifying the product
range and incorporating innovation.
Growth in the whole sale and retail sector has been
impressive with a consistent annual growth of 8.8 percent
in over a period of 5 years resulting in creation of 1.6 million
OCTOBER 2015 • THINK BUSINESS | 17
ANALYSIS
new jobs. Growth in this sector is
directly proportional to growth of
the middle and upper class who
form the bulk of the urban con-
sumer market.
The retail space is expand-
ing and local establishments are
spreading their tentacles to oth-
er East African countries. For-
eign interest in the country’s fast
growing retail sector with com-
panies from Europe especially
pitching camp. Spanish clothing
retailer Zara commenced opera-
tions last year via a distribution
agreement with local retailer
Deacons while French retailer
Carrefour also set up shop around
the same time. South African based retail chains Foschini
and Edgars are planning to open outlets in 2015.
Kenya remains the entry route for companies keen
to gain a foothold in East Africa. However, the bureaucrat-
ic challenges associated with establishing a new business
in Kenya remain a key obstacle for foreign firms aiming to
start operating in the country as a result, many foreign in-
vestors are seeking acquisitions.
Manufacturing
The manufacturing sector accounts for nearly 20 per-
cent of total foreign direct investment (FDI) inflow, while
the manufacturing base has remained at 11 percent of the
GDP for the past 10 years.
As a significant contributor to the GDP, the country’s
manufacturing sector has been stagnant in recent years,
and it has lost international market share. A report by The
World Bank dubbed ‘Kenya Economic Update 2014’ cited low
overall productivity and large productivity differences in
firms across subsectors point to lack of competition which
allows low-productivity firms to remain in business.
The report further indicates that a weak business en-
vironment is the key constraint to the growth of the manu-
facturing sector in the country. Obstacles to doing business
affect this sector more than any other due to the capital
intensity of investments involving the sector. A robust en-
vironment that can accommodate processing of goods till
finish will require steady supply of electricity at relatively
convenient pricing but more importantly streamlined and
efficient trade policies that encourage competitiveness.
The manufacturing industry is the second highest
employer accounting for 17 percent of jobs available today
and industry experts are hinting that unlocked to its full
potential, the statistics can double that.
Financial services sector
On this front Kenya can tap itself on the back, start-
ing from the financial services providers. The country
boasts of a progressive, liberal banking sector that has en-
abled the development of local businesses by encouraging
free movement of capital and providing financial products
which is fundamental for economic development. On ac-
count of a World Bank Global Findex for 2014, almost three
quarters of Kenyans reported having access to a formal fi-
nancial instrument.
Also to be hailed is the involvement of Kenyan banks
in the SME segment which is reported to have increased re-
markably over the past few years. Research conducted by
Fin Access Business from 2009 to 2013, shows that total
SME lending portfolio by December 2013 stood at Ksh 332
billion representing 23.4 percent of the banks’ total loan
portfolio.
Experts in the industry portend heightened relations
between financial institutions and the SME sector but this
would be catalyzed by having authentic data on SME finan-
cial markets. Banks therefore lack updated data to inform
product development and expansion strategies and policy
makers have scarce information on challenges, risks and
gaps in the market.
Small and Medium enterprises (SMEs) are not to be
taken lightly. The sector accounts for a whopping 50 per-
cent of people in employment today which translates to
Factbox
•	 50 percent percentage of employment created by SME sector.
•	 US$3.8 billion Agro- imports entering region that could be replaced by local
production.
•	 US$ 29 Trillion The market size of countries with major trade agreement
with Kenya.
•	 4th Kenya’s ranking in the global mobile payment readiness market.
•	 3 Days Time it now takes to register a business with the ease of doing busi-
ness reforms
•	 US$ 55 Billion 5th largest economy in the Sub –Saharan Africa.
•	 1 Million Containers of throughput in the port of Mombasa per given year.
•	 100 Percent Increase in manufacturing jobs from industrial transformation
programme initiatives.
18 | THINK BUSINESS • OCTOBER 2015
ANALYSIS
MINISTRY OF INDUSTRIALIZATION AND ENTERPRISE DEVELOPMENT
5th largest
economy in SSA
Market size of
countries with
a MAJOR trade
agreement
with Kenya
IN mobile payment
readiness
domestic population
REGIONAL
population
Time to register a business with
Ease of Doing Business Reforms
CONTAINERS of Throughput in
the port of mombasa per year
44 million
3 Days
4th GLObally$29 TRillion
13 MILLION
1 million
I
Increase in value
of leather when
manufactured
into shoes
size of our current leather market
IN MANUFACTURING JOBS FROM INDUSTRIAL
TRANSFORMATION PROGRAMME INITIATIVES
Percent of employment
created by SME sector
(11 Million)
Agro-imports entering region that could
be replaced by local production
TONNES of TUNA CAUGHT IN
THE INDIAN OCEAN YEARLY
100% INCREASE
12X $94 Million
%
$3.8 BILLION
1 MILLION
MINISTRY OF INDUSTRIALIZATION AND ENTERPRISE DEVELOPMENT
5th largest
economy in SSA
Market size of
countries with
a MAJOR trade
agreement
with Kenya
IN mobile payment
readiness
domestic population
REGIONAL
population
Time to register a business with
Ease of Doing Business Reforms
CONTAINERS of Throughput in
the port of mombasa per year
44 million
3 Days
4th GLObally$29 TRillion
13 MILLION
1 million
Increase in value
of leather when
manufactured
into shoes
size of our current leather market
IN MANUFACTURING JOBS FROM INDUSTRIAL
TRANSFORMATION PROGRAMME INITIATIVES
Percent of employment
created by SME sector
(11 Million)
Agro-imports entering region that could
be replaced by local production
TONNES of TUNA CAUGHT IN
THE INDIAN OCEAN YEARLY
100% INCREASE
12X $94 Million
%
$3.8 BILLION
1 MILLION
II
roughly 11 million people. Moreover there is a significant
number of players in this category who have bloomed to
reach levels of complexity and are very ably participating
in more sophisticated value addition and export activities.
Initiatives to support SMEs such as SME accelerator
can help the sector grow by over US$ 150 million in GDP and
inject hundreds of thousands of manpower into the econ-
omy.
Kenya is undoubtedly a global leader in the mobile
money market and ranks 4th
globally in terms of mobile
payment readiness. The innovative use of mobile phone
technology to drive financial inclusion in Kenya has been
widely acclaimed around the world, an aspiration that is
embedded in the country’s blueprint for prosperity; vision
2030. The grand plan envisions a deeper and broader fi-
nancial sector whose main objective is improving the live-
lihoods of majority of Kenyans, financing growth of busi-
nesses and funding ambitious and transformative flagship
projects.
Almost 15 years ago, the country experienced a pro-
liferation of mobile phone technology in the market pro-
viding a suitable platform for Kenya to leapfrog access to
financial services. As at March 2014 the number of regis-
tered mobile money account holders stood at 26.2 million
with a mobile money transaction value averaging Ksh 192.6
billion per month.
Broad access to financial services has been made pos-
sible by mobile network operators (MNOs) leveraging their
technology, pervasive distribution networks, and partner-
ships with banks to deliver mobile financial services to un-
banked and underserved segments of the population.
Mobile money has enabled anyone in Kenya with ac-
cess to a mobile phone to perform basic financial transac-
tions without having to use a bank account or rely on riski-
er, less efficient methods like delivering cash in person. 59
percent of adults in Kenya are actively using mobile money
services and products on a 30 day basis.
As Kenya’s mobile money market evolves, the CBK
continues to anticipate and address challenges as they
arise, and has recently formulated a regulatory framework
to guide market conduct and consumer protection.
The National Payment System (NPS) Regulations
issued in 2014 have systematized many of the regulatory
practices developed since the introduction of mobile money
in 2007, when the regulator articulated a prudential frame-
work that laid out requirements in ‘letters of no objection’
to mobile operators. The regulations also address emerging
market conduct and ecosystem issues, such as competition,
interoperability, consumer protection, and governance.
OCTOBER 2015 • THINK BUSINESS | 19
ANALYSIS

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TBM_ OCT_2015_GEORGE (1)

  • 1. T he journey towards becoming a globally competitive and prosperous country is anchored on radical and holistic transformation of the country’s social, political and economic structures. However any significant steps to be made on this front are heavily hinged on independent factors such as macroeconomic stability, continued governance reforms and infrastructural development, innovation and technology enhancement among others. To attain middle income status, Kenya needs to be experiencing unprecedented economic growth at a rate of 10 percent annual growth every year until 2030. Since the launch of the ambitious action plan, almost 8 years ago not once has the country registered growth in close proximity to the set target and with just 15 years to go it is evidently a race against time. However falling short of the blueprint projections shouldn’t sweep under significant notable strides made by the country. A Bloomberg Report for 2015 placed Kenya as one of the fastest growing economies ranking at 3rd place just behind China and Indonesia with growth estimates ex- pected to exceed 5 percent. Though the statistic is an indi- cator of propitious times that lay ahead, economic growth doesn’t necessarily translate to improved living conditions. The extent to which growth reduces poverty levels is solely dependent on the degree of involvement by those on the lower end of the socioeconomic structure. Moreover it is an obligatory requirement of Millennium Development Goals whose number one goal is eradication of extreme poverty and hunger. Vision 2030 master plan clearly elucidates specific sectors of the economy that bear the greatest responsibility in aiding the country through the transition to middle in- come status one of them being tourism. Fortifying economic drivers to achieve full industrialization It is 7 years since the launch of the country’s development blueprint Vision 2030, a master plan that was conceived with an objective of guiding Kenya on the road towards an economic prosperous future. By George Wainaina 16 | THINK BUSINESS • OCTOBER 2015 ANALYSIS
  • 2. Tourism Hitherto, tourism was one of the main non-agricul- tural foreign exchange earners, a vital source of revenue that is being hampered by a wave of security threats leading to decreased numbers of tourist arrivals. Recent statistics from World Travel and Tourism Council indicated that last year Kenya’s tourism and travel sector’s direct contribution to the GDP stood at 4.1 per cent which translates to Ksh 220.6 billion. The report further high- lights that total contribution by the tourism industry to the GDP was at Ksh. 561.8 billion which accounts for 10.5 per cent of the Gross Domestic Product. By 2025 it projects that the tourism industry will be experiencing annual growth of 5.1 percent every year in the coming decade. For this to happen there is need for increased facil- itation and infrastructural development to help surge the numbers. Despite having a similar tourist attraction capac- ity as Malaysia , Kenya is grappling with 1.8 million visitors whereas the latter boasts of having numbers to the tune of 30 million. An action plan under the Ministry of Industrialization and Enterprise Development clearly shows that the gov- ernment is cognizant of the fact that despite the vulner- ability associated with the sector, efforts geared towards increasing the industry’s competitiveness and developing the value proposition for the visitors. Under the MOIED blueprint it has plans to fully capacitate tourist parks in the country since currently 7 out of 26 parks receive 80 percent of the total number of visitors. Agriculture By the year 2030, Kenya hopes to promote an inno- vative, commercially oriented and modernized agricultural sector. It hopes to achieve this by transforming key insti- tutions in the agricultural and livestock sector to improve quality and enhance productivity. Today agriculture still remains the undisputed for- eign exchange earner with more than half of Kenya’s ex- ports related to agriculture like tea and horticulture. During the launch of the MOIED (Ministry of Indus- trialization and Enterprise Development) cabinet secretary Adan Mohammed emphasised on the need to increase our agricultural exports and attach identified opportunities in agro-processing that build on the vast agricultural poten- tial. Tea is a staple of Kenya’s exports raking in over US$1 billion annually and this happens without any value ad- dition since 97 percent of the commodity is exported in bulk form. This is replicated across the agricultural sector with only 16 percent of all exported agricultural output un- dergoes processing. This is in contrast to our East African counterparts Tanzania and Uganda where they process 27 percent and 34 percent of their agricultural exports respec- tively. In the industrial blueprint it notes that the country can attract a 50–100 percent price premium by promoting “Made in Kenya” brands internationally with a feasible po- tential to attract US$ 200 million in value addition and cre- ate an extra 10,000 jobs. Alike when it comes to processing of our agricul- tural exports, doubling of the quantities being processed could earn a further US$ 600 million and put an additional 110,000 people under employment. Textile and apparel Since the signing of the African Growth and Opportu- nities Act in 2000, textile and garment export have grown to roughly US$ 415 million. The act has been successfully extended for another 15 years making this the opportune moment to leverage on the opportunity to increase our ex- ports. Despite having an advantage over other low-cost countries in the partnership, Kenya accounts for only 0.4 percent of the US$ 84 billion American textile market whereas nations like Bangladesh that are 9 times more ex- pensive than Kenya commands 6 percent of the US market share. Leather Kenya has one of the largest livestock herds in Africa approximated at 60 million heads and though it has a well established leather sector it remains underutilized. In this sector the issue of unfinished exports prevails again since 90 percent of Kenya’s US$ 94 million leather exports are unfinished wet blue leather. Facilitating for processing of finished leather and leather goods would create an addi- tional 35,000 jobs and inject a further US$ 150- 250 million to the GDP and also contribute to substituting a portion of the US$ 86 million in shoe imports yearly. Wholesale and retail trade The 2030 blueprint envisions an empowered informal sector that is able to raise earnings by being granted the opportunity to transform itself into a part of the informal sector by increasing efficiency by reducing constraints be- tween consumer and the producer, diversifying the product range and incorporating innovation. Growth in the whole sale and retail sector has been impressive with a consistent annual growth of 8.8 percent in over a period of 5 years resulting in creation of 1.6 million OCTOBER 2015 • THINK BUSINESS | 17 ANALYSIS
  • 3. new jobs. Growth in this sector is directly proportional to growth of the middle and upper class who form the bulk of the urban con- sumer market. The retail space is expand- ing and local establishments are spreading their tentacles to oth- er East African countries. For- eign interest in the country’s fast growing retail sector with com- panies from Europe especially pitching camp. Spanish clothing retailer Zara commenced opera- tions last year via a distribution agreement with local retailer Deacons while French retailer Carrefour also set up shop around the same time. South African based retail chains Foschini and Edgars are planning to open outlets in 2015. Kenya remains the entry route for companies keen to gain a foothold in East Africa. However, the bureaucrat- ic challenges associated with establishing a new business in Kenya remain a key obstacle for foreign firms aiming to start operating in the country as a result, many foreign in- vestors are seeking acquisitions. Manufacturing The manufacturing sector accounts for nearly 20 per- cent of total foreign direct investment (FDI) inflow, while the manufacturing base has remained at 11 percent of the GDP for the past 10 years. As a significant contributor to the GDP, the country’s manufacturing sector has been stagnant in recent years, and it has lost international market share. A report by The World Bank dubbed ‘Kenya Economic Update 2014’ cited low overall productivity and large productivity differences in firms across subsectors point to lack of competition which allows low-productivity firms to remain in business. The report further indicates that a weak business en- vironment is the key constraint to the growth of the manu- facturing sector in the country. Obstacles to doing business affect this sector more than any other due to the capital intensity of investments involving the sector. A robust en- vironment that can accommodate processing of goods till finish will require steady supply of electricity at relatively convenient pricing but more importantly streamlined and efficient trade policies that encourage competitiveness. The manufacturing industry is the second highest employer accounting for 17 percent of jobs available today and industry experts are hinting that unlocked to its full potential, the statistics can double that. Financial services sector On this front Kenya can tap itself on the back, start- ing from the financial services providers. The country boasts of a progressive, liberal banking sector that has en- abled the development of local businesses by encouraging free movement of capital and providing financial products which is fundamental for economic development. On ac- count of a World Bank Global Findex for 2014, almost three quarters of Kenyans reported having access to a formal fi- nancial instrument. Also to be hailed is the involvement of Kenyan banks in the SME segment which is reported to have increased re- markably over the past few years. Research conducted by Fin Access Business from 2009 to 2013, shows that total SME lending portfolio by December 2013 stood at Ksh 332 billion representing 23.4 percent of the banks’ total loan portfolio. Experts in the industry portend heightened relations between financial institutions and the SME sector but this would be catalyzed by having authentic data on SME finan- cial markets. Banks therefore lack updated data to inform product development and expansion strategies and policy makers have scarce information on challenges, risks and gaps in the market. Small and Medium enterprises (SMEs) are not to be taken lightly. The sector accounts for a whopping 50 per- cent of people in employment today which translates to Factbox • 50 percent percentage of employment created by SME sector. • US$3.8 billion Agro- imports entering region that could be replaced by local production. • US$ 29 Trillion The market size of countries with major trade agreement with Kenya. • 4th Kenya’s ranking in the global mobile payment readiness market. • 3 Days Time it now takes to register a business with the ease of doing busi- ness reforms • US$ 55 Billion 5th largest economy in the Sub –Saharan Africa. • 1 Million Containers of throughput in the port of Mombasa per given year. • 100 Percent Increase in manufacturing jobs from industrial transformation programme initiatives. 18 | THINK BUSINESS • OCTOBER 2015 ANALYSIS
  • 4. MINISTRY OF INDUSTRIALIZATION AND ENTERPRISE DEVELOPMENT 5th largest economy in SSA Market size of countries with a MAJOR trade agreement with Kenya IN mobile payment readiness domestic population REGIONAL population Time to register a business with Ease of Doing Business Reforms CONTAINERS of Throughput in the port of mombasa per year 44 million 3 Days 4th GLObally$29 TRillion 13 MILLION 1 million I Increase in value of leather when manufactured into shoes size of our current leather market IN MANUFACTURING JOBS FROM INDUSTRIAL TRANSFORMATION PROGRAMME INITIATIVES Percent of employment created by SME sector (11 Million) Agro-imports entering region that could be replaced by local production TONNES of TUNA CAUGHT IN THE INDIAN OCEAN YEARLY 100% INCREASE 12X $94 Million % $3.8 BILLION 1 MILLION MINISTRY OF INDUSTRIALIZATION AND ENTERPRISE DEVELOPMENT 5th largest economy in SSA Market size of countries with a MAJOR trade agreement with Kenya IN mobile payment readiness domestic population REGIONAL population Time to register a business with Ease of Doing Business Reforms CONTAINERS of Throughput in the port of mombasa per year 44 million 3 Days 4th GLObally$29 TRillion 13 MILLION 1 million Increase in value of leather when manufactured into shoes size of our current leather market IN MANUFACTURING JOBS FROM INDUSTRIAL TRANSFORMATION PROGRAMME INITIATIVES Percent of employment created by SME sector (11 Million) Agro-imports entering region that could be replaced by local production TONNES of TUNA CAUGHT IN THE INDIAN OCEAN YEARLY 100% INCREASE 12X $94 Million % $3.8 BILLION 1 MILLION II roughly 11 million people. Moreover there is a significant number of players in this category who have bloomed to reach levels of complexity and are very ably participating in more sophisticated value addition and export activities. Initiatives to support SMEs such as SME accelerator can help the sector grow by over US$ 150 million in GDP and inject hundreds of thousands of manpower into the econ- omy. Kenya is undoubtedly a global leader in the mobile money market and ranks 4th globally in terms of mobile payment readiness. The innovative use of mobile phone technology to drive financial inclusion in Kenya has been widely acclaimed around the world, an aspiration that is embedded in the country’s blueprint for prosperity; vision 2030. The grand plan envisions a deeper and broader fi- nancial sector whose main objective is improving the live- lihoods of majority of Kenyans, financing growth of busi- nesses and funding ambitious and transformative flagship projects. Almost 15 years ago, the country experienced a pro- liferation of mobile phone technology in the market pro- viding a suitable platform for Kenya to leapfrog access to financial services. As at March 2014 the number of regis- tered mobile money account holders stood at 26.2 million with a mobile money transaction value averaging Ksh 192.6 billion per month. Broad access to financial services has been made pos- sible by mobile network operators (MNOs) leveraging their technology, pervasive distribution networks, and partner- ships with banks to deliver mobile financial services to un- banked and underserved segments of the population. Mobile money has enabled anyone in Kenya with ac- cess to a mobile phone to perform basic financial transac- tions without having to use a bank account or rely on riski- er, less efficient methods like delivering cash in person. 59 percent of adults in Kenya are actively using mobile money services and products on a 30 day basis. As Kenya’s mobile money market evolves, the CBK continues to anticipate and address challenges as they arise, and has recently formulated a regulatory framework to guide market conduct and consumer protection. The National Payment System (NPS) Regulations issued in 2014 have systematized many of the regulatory practices developed since the introduction of mobile money in 2007, when the regulator articulated a prudential frame- work that laid out requirements in ‘letters of no objection’ to mobile operators. The regulations also address emerging market conduct and ecosystem issues, such as competition, interoperability, consumer protection, and governance. OCTOBER 2015 • THINK BUSINESS | 19 ANALYSIS