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CHASING COMPETITION: Chase Bank General Manager Mr Parmain Ole Narikae: A study on banking competitiveness is being planned

Development of the financial system has been earmarked as a priority under Kenya's long-term development aims set out in Vision 2030 and the second Medium Term Plan (MTP) covering the period 2013-17.

Ensuring effective competition in the banking sector is a key part of this plan. There is concern that weak competition leads to high lending rates coupled with high interest rates spread and high switching costs. The Competition Authority of Kenya, which has the statutory mandate to examine competition issues in Kenya, seeks to conduct a market study into the banking sector.

The study will be undertaken in two phases with support from FSD Kenya. The objective of the first phase of the study is to carry out a preliminary competition and consumer protection assessment of the banking sector to determine specific areas of concern to inform more in-depth, focussed work during phase two. The services of a specialist service provider are sought to carry out both phases of the study, under the guidance of the Authority, to identify any barriers to competition and consumer protection issues.

Phase 2 will be contingent on the outputs from phase 1. FSD Kenya and the Competition Authority of Kenya will determine, based on the findings from the first phase, whether the public policy interest will be served by the more in-depth investigation envisaged in the second phase.

It will be at FSD Kenya and the Competition Authority of Kenya‘s sole discretion as to whether to move ahead with an alternative approach following the first phase if in their judgement such an alternative is preferable.

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