A History of Banking in Kenya: Full Documentary

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Like all nations, Kenya has been founded on the efforts of many people, institutions, organizations, corporations and professions. One of the foundations upon which the nation has been built is the banking profession and the banks and institutions through which that profession is practiced.

Banking in Kenya has contributed tremendously to the growth of the national economy and the well-being of millions of Kenyans since before the county’s independence on December 12th, 1963.

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History of Banking in Kenya: East Africa Protectorate

EA Protectorate

The history of banking in Kenya traces its roots to early European trade on the East African coast, chiefly Zanzibar, in the later part of the 19th century. In 1887 Sir William Mackinnon, with the endorsement of the British Foreign Office, set up what later came to be known as the Imperial British East Africa Company (IBEAC).

The formation of the IBEAC captured the attention of the National Bank of India, (NBI) which entered into agreement with the East African representatives of the merchant company,

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History of Banking in Kenya: Independence & Africanization

Independence & Africanisation

The banks expanded but banking access and employment opportunities for Africans in the banking industry took time to materialize. It was only until 1910 that banking services became available to Africans. This was made possible when the Post Office Savings Bank as a department within the colonial postal service.

By March 1911 Post Office Savings Bank boasted 1,231 accounts, of which 684 belonged to Africans. Even then, the service was only available in places where officials of the colonial postal service were stationed and therefore did not reach the majority of Africans who resided in rural areas.

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History of Banking in Kenya: Role of Regulation

Regulation

The first Kenyan currency notes went into circulation in 1966 after the establishment of the Central Bank of Kenya three years after the country became independent. The Bank issued the first Kenya coins on April 10th 1967. They were in denominations of 1 and 2 shillings, and 5, 10, 25 and 50 cents. The Central Bank established accounts for all the commercial banks in Kenya. On November 16th 1966, the Central Bank took over the operations of the Bankers’ Clearing House.

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History of Banking in Kenya: "Indigenous" Banks

‘Indigenous’ Banks

The commercial banks the Central Bank regulated were all foreign owned, a situation that was part of the colonial heritage that the new government of independent Kenya was determined to change.

The country’s first fully locally owned commercial bank came on June 19th 1965 when the Co-operative Bank of Kenya was registered as a co-operative society initially to serve the growing farming community. Co-op Bank, as it came to be known, commenced operations as a bank on January 10th 1968 with a start-up capital of only KShs 255,000,

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History of Banking in Kenya: Govt-Owned Banks

Govt-Owned Banks

The first fully government owned bank – the National Bank of Kenya – was established on June 19th 1968 with John Michuki, then Treasury permanent secretary, as chairman of its board of directors. Other directors were Eliud Matu Wamae, Patrick Mwangola and Kipkurui Cherono. Two years later, Michuki was appointed executive chairman of the newly established Kenya Commercial Bank (KCB) and his place at the National Bank of Kenya was taken over by Stanley Githunguri.

The government set up Kenya Commercial Bank after buying a 60% stake in the National and Grindlays Bank and splitting the bank up into two banks – the Kenya Commercial Bank and Grindlays Bank International (Kenya).

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History of Banking in Kenya: Pre-Independence

Pre-Independence

The history of banking in Kenya traces its roots to early European trade on the East African coast, chiefly Zanzibar, in the later part of the 19th century. In 1887 Sir William Mackinnon, with the endorsement of the British Foreign Office, set up what later came to be known as the Imperial British East Africa Company (IBEAC).

The formation of the IBEAC captured the attention of the National Bank of India, (NBI) which entered into agreement with the East African representatives of the merchant company,

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History of Banking in Kenya: Impact of Technology

Technology

The use of technology in banking in Kenya in fact dates back to the days of the National Bank of India. The technology in use at that time, manual weighing scales, was fairly crude and mechanical. The weighing scales were manufactured in London and shipped in already calibrated and ready for use. They came in varying sizes and used different weighing stones whose fixed weight was the equivalent of a certain amount of rupees.

Huge volumes of books were used for purposes of keeping accounts as well as documents that constituted powers of attorney and wills.

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: Stakeholders engage on the effects of interest rate controls in 2018.

Interest Controls

In August 2016, Kenya’s President Uhuru Kenyatta assented to the Banking (Amendment) Bill 2015, which had been brought forward by Kiambu Member of Parliament, Hon. Jude Njomo, as a private member’s bill. The development set the stage for the enforcement of the Banking (Amendment) Act 2016 which set the maximum interest rate at a maximum of 4 percent above the Central Bank’s Base Rate (CBR) for any credit facility in Kenya; with a ceiling of 70 percent on deposits in interest-earning accounts to 70 percent of the base rate.

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: Kenya Bankers Association Chairman, Vice Chairman and CEO share perspectives on the impact of COVID-19 in 2020.

COVID-19

In December 2019, reports emerged about a new disease that was at the time spreading in the Wuhan Province in China. By February 2020, the Coronavirus disease (COVID-19) had spread into other countries in the world. On 12th March 2020, the Ministry of Health confirmed the first case of the disease in the country. The situation prompted the Government to introduce a wide range of containment measures, which included lockdowns, travel restrictions, among a wide range of other interventions.

The COVID-19 pandemic sailed the banking industry – and all other sectors of the economy – into a rather unfamiliar business environment in the year 2020.

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Capacity Building

In the pre-independence days, most banking staff were European and Asian. Africans entered the industry in low and junior positions. In the years before the three banks operating in the colony used to bring in expatriate staff who were already trained and had gained experience at their banks’ headquarters in London, or in India. There was little facility for training local staff. Read More

Diversity

Dr. Mary Okelo entered the annals of Kenyan banking history when in 1977 she became the first African woman to rise to the post of a bank branch manager.

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Timeline

Decades of Banking Industry Transformation

History of Banking Trivia.

How well do you know your bank? Banks in Kenya have a very rich history and we would like to know how well you know your bank. Click on the ‘Next’ button for our Trivia.


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National Bank of South Africa merged in 1925 with Colonial Bank and Anglo-Egyptian Bank to form Barclays Bank -Dominion, Colonial and Overseas (DCO) - 1925