Connect with us

Hi, what are you looking for?

Capital Business
Capital Business


Bankers see increased lending to the private sector – CBK Survey

A perception survey by the Central Bank of Kenya’s Monetary Policy Committee (MPC) reveals that commercial banks see loosening of purse strings in the coming months/FILE

NAIROBI, Kenya, Jun 18 – Commercial banks see an increase in lending to the private sector in the second half on 2018 as economic activity picks up, prompting a demand for credit.

A perception survey by the Central Bank of Kenya’s Monetary Policy Committee (MPC) reveals that commercial banks expect the settlement of pending bills by the National and County governments owed to businesses will spur the economy towards a vibrant credit environment.

The banks, however, cited their inability to effectively price risk due to the existing interest rate caps, as the most significant deterring factor to faster private sector credit growth.

While presenting the budget statement to parliament last Thursday, National Treasury Cabinet Secretary Henry Rotich announced the interest rate caps will be removed within the 2018/2019 financial year.

Rotich admitted that the interest rate ceiling has contributed to slow growth in credit to the private sector especially to micro, small & medium enterprises (MSMEs) in the agriculture and trade sectors.

“The aim of the amendment which was to expand access to financial services and increase return on savings has not been achieved since banks have shied away from borrowers they consider riskier and have priced above the maximum lending rate.

“In this regard, the Government is putting in place a package of reforms aimed at optimizing lending to the private sector while at the same time encouraging innovation in the financial sector in Kenya,” said Rotich.

The World Bank, in its Kenya Economic Update in December 2017, said a lag in credit to the private sector from 2015 was partly to blame for the country’s slowdown of economic performance.

The MPC survey, however, shows Commercial banks, microfinance banks and non-bank private sector firms say they expect higher economic growth in 2018/2019 supported by agriculture due to favourable weather conditions, continuing Government spending on infrastructure, focus on the Big 4 priority areas and growth in foreign direct investment.

Advertisement. Scroll to continue reading.
Click to comment

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...


NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...


NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...


NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...


NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...