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 wellbeing of millions of Kenyans since before the county’s independence on December 12 1963.
Kenya in the 1800s
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).
More banks set up in the 1900s
In 1900 National Bank of India’s business had sufficiently grown to enable the bank to purchase land and construct its own building in Treasury Square in Mombasa.
The railway finally arrived at Kisumu in 1901 and helped to open up the hinterland for business. The fastest growing inland centre was Nairobi which had been established in 1899 as a camp for the railway crew.
Post Office Savings Bank
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,
Co-operative Bank of Kenya
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.
In 1969 Standard Bank of South Africa merged with the Chartered Bank of India, Australia and China to become the Standard Chartered Bank (StanChart). On its part, Barclays shed the Dominion, Colonial and Overseas (DCO) tag to become Barclays Bank International. A decade later it was locally incorporated in Kenya as Barclays Bank of Kenya (BBK) with Samuel Waruhiu as its first chairman while T.D.
As they have grown to meet the demands of a growing market, Kenyan banks have had to cope with a changing foreign exchange situation that has continued to pose a great challenge to their operations. Following the international gold crisis of early 1968 and its resultant devaluation of the British sterling pound to which the Kenya shilling was pegged, the Central Bank and the Kenya government found it necessary to impose foreign exchange controls and import licensing.
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.
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.
Dr. Mary Okelo
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. Her promotion at Barclays Bank opened the door for more women to rise to management positions in Kenyan banks. It also opened new doors for her. By July 1987 she had risen to become a director of the African Development Bank and a senior advisor to the bank’s president.
In July 2012, the Kenya Bankers Association celebrated its fiftieth anniversary, barely a year before the nation’s own jubilee celebration of independence. The occasion brought together leading personalities in the banking industry, both past and present, as well as a number of key officials, including the President of the African Development Bank, Donald Kaberuka; and the Minister for Finance, Njeru Githae.