Public Disclosure Copy
The World Bank Implementation Status & Results Report
Financial Sector Support Project. (P151816)
Financial Sector Support Project. (P151816)
AFRICA | Kenya | Finance & Markets Global Practice |
IBRD/IDA | Investment Project Financing | FY 2015 | Seq No: 5 | ARCHIVED on 31-Oct-2017 | ISR29524 |
Implementing Agencies: Republic of KENYA, Directorate of Budget & Fiscal & Economic Affairs
Key Dates
Key Project Dates
Bank Approval Date:30-Apr-2015 Effectiveness Date:10-Jul-2015
Planned Mid Term Review Date:28-Feb-2018 Actual Mid-Term Review Date:--
Original Closing Date:31-Jul-2020 Revised Closing Date:31-Jul-2020
Project Development Objectives
Project Development Objective (from Project Appraisal Document)
The project's development objective is to strengthen the legal, regulatory and institutional environment for improved financial stability, access
to and provision of, affordable and long term financing.
Has the Project Development Objective been changed since Board Approval of the Project Objective?
No
PHRPDODEL
Components
Name
Component 1: Strengthening Institutions:(Cost $23.30 M)
Component 2: Enabling Efficient Financial Intermediation:(Cost $6.40 M)
Component 3: Mobilizing Long-Term Finance:(Cost $5.30 M)
Component 4: Supporting Project Management:(Cost $1.30 M)
Contingency:(Cost $0.70 M)
Overall Ratings
Name Previous Rating Current Rating
Progress towards achievement of PDO Moderately Unsatisfactory Moderately Unsatisfactory
Overall Implementation Progress (IP) Moderately Unsatisfactory Moderately Unsatisfactory
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Public Disclosure Copy
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The World Bank Implementation Status & Results Report
Financial Sector Support Project. (P151816)
Overall Risk Rating Moderate Moderate
Implementation Status and Key Decisions
The Financial Sector Support Project (FSSP) was effected on July 10, 2015, with an expected closure date of June 2020. FSSP was build on previous
financial sector reforms and gains realized through the Financial and Legal Sector Technical Assistance Project (FLSTAP). The FSSP project is
expected to support Kenyan financial sector authorities in further developing regulatory and supervisory frameworks that continue to be effective in
mitigating the new risks associated with the financial sector’s rapid development, deepening expansion across sectors, and across borders. It supports
the upgrade of the supervisory, regulatory, and institutional framework to keep pace with more complex markets and products with the overall objective
of enhancing stability.
FSSP’s project components and key interventions include:
Component 1: Strengthening Financial Institutions
This component focuses on the overarching reform, modernization, and capacity support to the financial sector institutional framework. This component
delivers technical assistance to the various beneficiaries, mostly in the form of consultancies, to design roadmaps and action plans, and implementation
support to realize the planned reforms. It also supports the upgrade of IT systems and delivers capacity support to ensure a more effective functioning
of the financial architecture.
Under this component, the project has primarily assisted financial sector regulators in strengthening their surveillance systems, through both IT
upgradation and advisors and technical assistance on the implementation of risk-based supervision; and helped develop frameworks for deposit
guarantees and deposit insurance for the non-bank sectors. Beneficiaries of this component include the Central Bank of Kenya (CBK), the Insurance
Regulatory Authority (IRA, the SACCO Societies Regulatory Authority (SASRA), the Kenya Deposit Insurance Corporation (KDIC),
Component 2: Enabling Efficient Financial Intermediation
This component accelerates the financial inclusion agenda in the Republic of Kenya with a focus on strengthening financial infrastructure and making
more transparent the pricing of financial intermediation (savings and lending) so that more businesses and individuals have access to affordable
financial products. The component supports consultancies, training and IT purchases.
Under this component, the Project has committed to support the implementation of a collateral registry system, and provide technical assistance in
shoring up the legal and regulatory framework for movable property. Additionally, the Project is supporting strengthening of the Insolvency Framework
through technical assistance, and providing assistance in assessing and strengthening the credit reporting system in Kenya. Key beneficiaries under
this component include the Office of the Attorney General, and National Treasury.
Component 3: Increasing Availability of Long-term Finance
This component focuses on strengthening the demand for and supply of long-term funds so that Kenya’s growing development finance needs for long-
term projects in infrastructure, housing, etc. can be met. The component includes support via consultancies, training and IT purchases.
Under this component, the Project is supporting the development of a range of products for long term finance, including around informal pensions, new
capital market products, and new insurance products. Additionally, this component will assist regulators in upgrading systems and modernizing financial
infrastructure for issuing long term debt. Key beneficiaries include the Retirement Benefits Authority (RBA), Insurance Regulatory Authority (IRA),
Capital Markets Authority (CMA), and Central Bank of Kenya (CBK).
Risks
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Public Disclosure Copy
Public Disclosure Copy
The World Bank Implementation Status & Results Report
Financial Sector Support Project. (P151816)
Systematic Operations Risk-rating Tool
Risk Category Rating at Approval Previous Rating Current Rating
Political and Governance Substantial Substantial Substantial
Macroeconomic Moderate Moderate Substantial
Sector Strategies and Policies Moderate Moderate Moderate
Technical Design of Project or Program Moderate Moderate Moderate
Institutional Capacity for Implementation and
Sustainability
Low Low Low
Fiduciary Moderate Moderate Substantial
Environment and Social Low Low Low
Stakeholders Low Low Low
Other -- -- --
Overall Moderate Moderate Moderate
Results
Project Development Objective Indicators
PHINDPDOTBL
Progress towards achieving compliance with Essential Criteria of Basel Core Principles 12 (consolidated supervision) and 13
(home-host relations) (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value MNC/LC -- No progress Compliant
Date 01-May-2015 30-Dec-2016 23-Oct-2017 31-Jul-2020
PHINDPDOTBL
Reduced net interest margin (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value No -- Yes Yes
Date 01-May-2015 -- 23-Oct-2017 31-Jul-2020
PHINDPDOTBL
Long-term assets held by pension funds (Percentage, Custom)
Baseline Actual (Previous) Actual (Current) End Target
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The World Bank Implementation Status & Results Report
Financial Sector Support Project. (P151816)
Value 47.00 49.00 49.00 52.00
Date 01-May-2015 19-Sep-2016 23-Oct-2017 31-Jul-2020
Overall Comments
The first PDO on consolidated supervision and host-home compliance will need to be reconsidered at mid-term. The PDO was developed with the
CBK, under the stewardship of the former Governor. In light of the many challenges the financial sector has faced since the new CBK governor
has stepped in, the focus for CBK is directly on strengthening banking supervision in the domestic market before embarking on a more ambitious
path to look at consolidated and cross-border supervision. This is a strategic shift supported by the task team. The second PDO will also need to
be reconsidered, since compliance is a direct result of the interest rate cap, rather than any structural achievements that have brought down the
cost of credit or interest margins.
Intermediate Results Indicators
PHINDIRITBL
Mapping exercise of financial conglomerates (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value No -- No Yes
Date 01-May-2015 30-Dec-2016 23-Oct-2017 31-Jul-2020
PHINDIRITBL
Number of MDAs services using electronic payment instruments (Number, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value 0.00 -- 200.00 3,000.00
Date 01-May-2015 -- 23-Oct-2017 31-Jul-2020
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The World Bank Implementation Status & Results Report
Financial Sector Support Project. (P151816)
PHINDIRITBL
Increase in Pension coverage (Percentage, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value 15.00 18.20 19.50 20.00
Date 01-May-2015 30-Dec-2016 23-Oct-2017 31-Jul-2020
PHINDIRITBL
Draft framework for sub-national entities on debt management (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Assessment of financing
Value No -- gaps for Counties is Yes
ongoing
Date 01-May-2015 -- 23-Oct-2017 31-Jul-2020
PHINDIRITBL
Increase in banked retail investor accounts accessing Trearusy Mobile Direct (TMD) (Number, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value 15,000.00 -- 103,000.00 150,000.00
Date 01-May-2015 -- 23-Oct-2017 31-Jul-2020
PHINDIRITBL
Draft legal framework for a secured transactions regime (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value No -- Yes Yes
Date 01-May-2015 -- 23-Oct-2017 31-Jul-2020
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Financial Sector Support Project. (P151816)
PHINDIRITBL
Depth of credit information index (Number, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value 0.00 7.00 7.00 3.00
Date 01-May-2015 30-Dec-2016 23-Oct-2017 31-Jul-2020
PHINDIRITBL
Draft framework / regulation for new long term products (Number, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value 0.00 -- 0.00 2.00
Date 01-May-2015 -- 23-Oct-2017 31-Jul-2020
PHINDIRITBL
Increase in volume of secondary market transactions of government debt (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value N/A -- Yes Yes
Date 01-May-2015 30-Dec-2016 23-Oct-2017 31-Jul-2020
PHINDIRITBL
Increase in Insurance coverage (Percentage, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value 3.70 -- 2.92 6.00
Date 01-May-2015 -- 23-Oct-2017 31-Jul-2020
Overall Comments
Several of the intermediate indicators will also need to be reconsidered. Mapping exercise of financial conglomerates needs to be discussed
again with the CBK to gauge their appetite to shift strategic focus on consolidated supervision. The indicator for MDAs appears overly ambitious
from the design stage, and the PBA has shifted several times since project effectiveness, including to regulatory authorities outside the scope of
support of the FSSP. Increase in insurance coverage may need to be revised, as the baseline was revised downwards in 2015 following Kenya’s
rebasing of the economy.
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Public Disclosure Copy
Public Disclosure Copy
The World Bank Implementation Status & Results Report
Financial Sector Support Project. (P151816)
Data on Financial Performance
Disbursements (by loan)
Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed
P151816 IDA-56270 Effective USD 37.00 37.00 0.00 4.66 32.33 13%
Key Dates (by loan)
Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date
P151816 IDA-56270 Effective 30-Apr-2015 04-Jun-2015 10-Jul-2015 31-Jul-2020 31-Jul-2020
Cumulative Disbursements
Restructuring History
There has been no restructuring to date.
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Financial Sector Support Project. (P151816)
Related Project(s)
There are no related projects.
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