10th Anniversary of Financial Services Programme of Swisscontact East Africa

Position, 17.06.2016

Remarks by Dr. Ralf Heckner, Ambassador of Switzerland to Kenya, Burundi, Rwanda, Somalia and Uganda, on the occasion of the 10th Anniversary of Financial Services Programme of Swisscontact East Africa.
Friday, 17 June 2016,  at 12:30 p.m., Crowne Plaza Hotel, Nairobi

CEO Swisscontact, Mr. Samuel Bon,
CEO Equity Bank, Dr. James Mwangi,
Distinguished guests, Ladies and gentlemen,

Thank you to Swisscontact, especially to Ms. Veronique Su, for inviting me. I am very happy to be here celebrating Swisscontact’s Financial Services Programme 10th anniversary.

When Veronique asked me to address this important gathering of financial, business and development representatives, my answer was a straightforward yes – because what Swisscontact is doing is very much in line with the Swiss Government’s economic policies and its approach to the private sector and society at large. Let me explain to you what I mean by that. Let me delve into the question of Switzerland’s success as a country in which the private sector and the individual private citizen play a key role.

Switzerland’s success has to do with the fact that there is a division of labor between the different levels of government. Switzerland as a federal state firmly believes in what we call subsidiarity. This means one simple thing: what can be done at a lower administrative level, the level of a village, a city or a Canton, a County, should be dealt with at that level. Only a few important political issues should be dealt with by the federal level: foreign affairs, defense, monetary policy, or telecommunications. In Switzerland, we are convinced that the village authorities know best what is good for their citizens.

The people of Wajir know best what is good for them – not the Capital Nairobi. In this respect, devolution is a great opportunity for the Kenyan people to bring politics closer to them.

Secondly, the Swiss people want to be free, free to live their lives, free to decide on all political issues they deem important to them. Switzerland is the only direct democracy on this planet. This means that the Swiss citizens decide in popular votes on issues from nuclear energy to immigration. I still remember the year 1992 when I had to cast my ballot on the question whether the Swiss people wanted to invest billions of dollars in a new railway infrastructure project. I voted yes. And at the beginning of this month, the longest tunnel in the world, a 57 km long railway tunnel, through the Swiss Alps was inaugurated. This new infrastructure will now be used by all Italian and Northern European transport and cargo businesses. It will cut costs of transport. It will be environmentally sound. But it is also connecting the Italian speaking southern part of Switzerland with the German and French speaking parts of Switzerland. This new railway tunnel is good for Switzerland’s cohesion as a nation.

In Kenya, important infrastructure projects, like the new railway from Mombasa to Nairobi, are being carried out too. It will be of the utmost importance that these projects are realized up to the Ugandan boarder. It will be just as vital for the new railway infrastructure to be well managed and maintained. Finally, it will be crucial for the cost to remain within its budget. Only then, the Kenyan people and the Kenyan businesses can really benefit from these investments.

Dear business representatives, you are among the most important tax payers in this country. I don’t have to explain to you how determining good policies and balanced budgets are for a good investment climate and for the success of your business. But good fiscal policies are good for all. In the 1990s, Switzerland faced an ever growing budget deficit. Government and Parliament came up with – what we call – a "fiscal brake". Whenever the Swiss government sees a gap between state expenditures and fiscal earnings, it is obliged to immediately cut costs in the current budget year. In the last ten years, while the U.S. and Europe faced a fiscal crisis, Switzerland had a budget surplus. From 2006 to 2016, the Swiss Federal Department of Finances put 27 billion dollars aside.

Last week, Treasury Cabinet Secretary Rotich presented Kenya’s budget for the fiscal year 2016/17. The deficit would be much lower if the Kenyan State were to expand the tax base and bring the informal sector into the formal economy. This would enable the Kenyan State to equally and justly tax its citizens and businesses and with that contribute to a fairer society.

I come to my fourth point which is part of Switzerland’s success story: the banking sector. A functioning banking and financial sector is like railways and streets. A functioning banking and financial sector is a crucial infrastructure for businesses and private people to thrive. For that reason, Swisscontact has been working hard for the last ten years to contribute to developing financial services in East Africa. I would like to commend Swisscontact for choosing the financial sector as a focus.

Kenya is the East African country with the most developed banking sector. At this point in time, there are some dark clouds hanging over the Kenyan financial sector. Several banks had to be closed. The market forces have been released and will lead to a consolidation of the Kenyan banking businesses. The Central Bank of Kenya will have to walk a fine line between ensuring corporate governance of Kenyan Banks and creating the conditions for liquidity and credits for the Kenyan economy to grow.

Creating the conditions for the private economy to grow is what the Swiss Government is striving for. That’s Switzerland’s approach to the private sector. The state sets the rules and creates the conditions which allow the private business to develop and grow. It is then up to the private sector to be innovative and competitive domestically and internationally. There is also apartnership between State and Business. Switzerland provides a good education. The private companies provide young people, when they enter the workforce for the first time, what we call, vocational training. Technical High Schools and companies work together to ensure we have good electricians, plumber, mechanics, engineers, bakers and carpenters.

Kenya is a country of young people. Vocational training would provide a real opportunity to these young people to find a job and to start their own small and medium sized businesses. Kenya is full of innovative and creative people!

Partnership is a buzz word. But success relies on partnership. Goal 17 of the Sustainable Development Goals is about partnership. I am happy to say that the Swiss Government through the Swiss Development Agency is partnering with Swisscontact in Rwanda. Today’s event is all about partnership between private sector, development actors and government representatives. Only together can we make Switzerland, Kenya and the world a better place for all.

But to achieve that, states, businesses and societies have to focus on two fundamental things: Peace and the fight against corruption! The Swiss financial center could only develop thanks to Switzerland’s political stability. Switzerland has enjoyed peace from war for more than 200 years. And after a short civil war in 1847, Switzerland’s political system had and has one priority: ensuring domestic peace. The regions of Switzerland – as the French, the German, the Italian and the Romansch speaking regions – are represented in government, a body of seven members. The Swiss political system is based on compromise. The Swiss don’t know the mentality of "the winner takes all".

Having a look at current Kenyan politics, I am deeply concerned by what I see: a divided country already now experiencing political violence moving forward to next year’s elections.

On corruption: Switzerland is one of the countries with the lowest level of corruption worldwide. I would never work for a corrupt government! It’s good to have a very low level of corruption. That means that the tax payers’ money is fully invested in education, infrastructure and so on.

Switzerland is cooperating with the Kenyan authorities to fight corruption. Switzerland is providing legal assistance to Kenya in one of the biggest corruption scandals of this country: Anglo Leasing. Anglo Leasing is also high lightening one thing: corruption kills. Why? Well because Anglo Leasing was about contracts for the security of this country. President Kenyatta has committed himself publicly on various occasions to address corruption in Kenya. Switzerland is committed to supporting the President’s anti-corruption policy. Over the last decades, Switzerland has been gaining a vast expertise in the fight against corruption and money-laundering, in particular due to its position as one of the largest global financial hubs. In order to avoid being a safe haven for illicit funds, Switzerland has continuously strengthened its respective legislation; and Switzerland has also returned blocked assets to the people of the Philippines, Nigeria and Haiti, to name just a few.

I conclude. Switzerland’s success is based on a lot of different things: a division of labor between the levels of government, partnership between State and private business, a good financial sector and performing infrastructures. But, first and foremost, Switzerland’s success is all about the Swiss people. The Swiss people are hardworking and decent people. I am proud to represent the Swiss people.

And I feel privileged to serve my country on the African Continent; a continent on the move. Some of the fastest growing economies in the world are in Africa, Kenya is one of them. I wish Swisscontact and its partner organizations success. And I am very much looking forward to working with you towards strengthening the bilateral relations between Switzerland and East Africa.

Thank you for your attention.