in the 21st Century

40 Kenya’s Financial Transformation in the 21st Century
Figure 10: Increase in deposit accounts
Number of accounts (’000)
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2004 2005 2006 2007 2008 2009 2010 2011 2012
700
600
500
400
300
200
100
0
Number of accounts per 1,000 adults
Deposit accounts ('000)
Source: CBK Supervision Reports (various years).
Deposit accounts per 1,000 adults
3.6 Patterns of lending
We now discuss the performance of the banking sector in terms of its
contribution to the real economy. Figure 11 shows the contribution to GDP of
three main sectors of the economy – agriculture, manufacturing and finance –
for 2000, 2005 and 2012. It shows that despite growth in the last decade, there
has been little structural transformation of the economy. The contribution of
agriculture to GDP dropped slightly from 28.4% in 2000 to 25.9% in 2012.
The contribution of the financial sector increased slightly from 3.5% to 5.2%
in the same period. A key concern is that the contribution of the manufacturing
sector dropped from 10.3% in 2000 to 9.2% in 2012. Meeting Kenya’s Vision
2030 goals requires a structural transformation of the economy, in particular
growth in the manufacturing sector. A recent government policy document
stated that ‘[t]he overall goal for the [manufacturing] sector over the next five
years will be to increase its contribution to GDP by at least 10 per cent per
annum’ (Republic of Kenya, 2012). However, it is not clear that the financial
sector is supporting this goal.