By Beth Ngugi
The Kenya Bankers Association (KBA) has announced plan to introduce a new self-regulatory framework by the end of June this year aimed at enhancing governance in the banking sector.
This is expected to increase more pressure to those financial institutions that fails to adhere to the new code of ethics which will spell out tough measures to be taken on rogue bank officials: among them being deregistration of a member who contravenes the framework set.
Speaking during the signing of code of ethics for business in Kenya, Kenya Bankers Association boss Habil Olaka cited that all the banks in the country will have to sign the code of ethics before being allowed to access the clearing house at the Central Bank.
He added that once the self-regulatory framework is set by the regulatory body, it will provide a clear platform and structure in which tough measures can be taken against a member who does not abide by the code; and that can be as tough as expulsion of a member.
“As KBA, we are committing to establish specific ethical standards and requirements that our members must adhere to and that are tied to the private sector code of ethics,” said Mr. Olaka.
The “code of ethics for business in Kenya” is an initiative by the business community in Kenya to promote and enhance the ethics of business conduct. The code was developed under the United Nations Global Compact which asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment and anticorruption.
KBA chief said this code of ethic is aimed at cultivating a culture of governance and transparency in the banking industry and safeguard the interests of customers, investors, suppliers and all other stakeholders.
He added that in recognition to enhance banking practices and governance standards, its members have agreed that there is need to work collaboratively and keep each other accountable.
This code of ethics has been approved by President Uhuru Kenyatta as a way of curbing corruption and unethical practices within the government and the private sector
In the wake of the current financial developments, he said, the strengthening of consumer protection and winning their trust is paramount, especially after the recent shakeup in the financial sector which saw at least three banks collapse.
“Auditors have upped their game; the Central Bank of Kenya has stood tough; so even banks have to up their game. There is no room for lack of governance and ethical business. Early in the year, CBK Governor said that 2016 is the year of transition. It is time for banks to report their actual balance sheets which show the same picture on the ground,” Olaka affirmed.
KBA is looking forward to working with key partners to introduce requirements that are tied to the code of ethics which was developed on behalf of the private sector by Kenya Private Sector Alliance (KEPSA), Global Compact Network Kenya, and Kenya Association of Manufacturers (KAM).
Also in attendance of the signing was KEPSA CEO, Carole Kariuki who highlighted that there was need to build up and strengthen institutions within each of these sectors to play a more decisive role in promoting corporate governance and accountability.
By Beth Ngugi