Money Markets
By MUTHOKI MUMO
In Summary
- Country credit rating expected to shoot up
- This will boost the country’s ambitions to become an African financial hub.
- According to Central Bank governor Njuguna Ndung’u, the removal of Kenya from the “dark grey list” will also improve the creditworthiness of the country and local financial institutions.
Kenya has been removed from a watch list of countries that are not sufficiently combating money laundering and terror financing.
In a statement last week, the Financial Action
Taskforce said legal and regulatory reforms in Kenya meant that the
country would no longer be subject to compliance monitoring.
This reduces the risk associated with the country
as an investment destination and will have ripple effects on capital
flows in the private sector as well as economic growth.
“Businesses usually factor the risk of failing to
meet the taskforce standards in their decisions. This will no longer be
the case in Kenya,” said Mr Jackson Kitili, interim director of the
Financial Reporting Centre.
According to Central Bank governor Njuguna Ndung’u,
the removal of Kenya from the “dark grey list” will also improve the
creditworthiness of the country and local financial institutions.
“It means it is easier for correspondence bank
facilities, easier to negotiate competitive rates for international
credit and above all, the credit and risk rating for the country is now
positively enhanced,” said Prof Ndung’u.
Sets standards
The Financial Action Taskforce sets standards for
anti-money laundering and counter-terrorism financing and monitors
progress in implementation of these standards worldwide.
A 2010 evaluation of Kenya’s performance against
the taskforce’s recommendations revealed that the country was faring
poorly. The Proceeds of Crime Anti-Money Laundering Act was yet to be
implemented adequately; there was no financial intelligence unit nor a
legal framework on terrorism financing.
Two years later, Kenya was nearly blacklisted for
failing to meet Financial Action Taskforces’ standards. This would have
seen the country categorised at par with Iran and North Korea.
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