December 31st, 2009

A difficult year had been projected for 2009 following the shocks of the postelection violence the previous year, the global economic crisis and escalation in key commodity prices. Early in the year it became apparent that food security was again threatened by a severe drought. Inevitably agriculture performed poorly. However the political solution reached in 2008 held and a number of other sectors started to recover. The financial sector, something of a barometer for wider business confidence, showed modest growth. Contagion from the global financial system remained limited. Overall growth in gross domestic product (GDP) for 2009 is projected at 2.5%. While far below the level Kenya needs to reach in order to make substantial progress towards its national development goals and especially the reduction in poverty it is a remarkably positive result in the circumstances.

Against the backdrop of the continued challenging environment we present our annual report to stakeholders. Positive developments continued to be made during the year towards the goal of extending financial inclusion. Many of FSD’s partners made significant progress although some were clearly impacted by the various external shocks experienced by the country. This report sets out the activities in which we’ve been engaged over the year and also provides our commentary on the market developments we’ve seen. We hope it offers a useful perspective. However it is also an important contribution to ensuring that FSD remains accountable for what we do. We understand accountability to be very much a two-way process. Feedback from our stakeholders on what we present in this report or on our work more broadly, both positive and negative, is essential to ensuring that we remain responsive to you. FSD’s work aims to support the development of sustainable financial markets.

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