Kenya: Banks private credit growth hits 8.6%

Lending by commercial banks to companies and individuals increased the highest since February last year to December pointing to economic recovery from the coronavirus economic crisis, data from the Central Bank of Kenya (CBK) showed yesterday.

CBK Governor Patrick Njoroge said private sector credit grew by 8.6% in the year to December compared to 7.8% in October, the highest since February 2021 highlighting increased business activity in various sectors.

However, the credit growth remained well below the central bank’s target rate of 12-15%, deemed adequate to support economic development.

The CBK Governor noted the economy rebounded in the three months to December, adding that the State’s ongoing stimulus programme would sustain and boost economic recovery in the new year.

Kenya’s economy rebounded in the third quarter of last year following the easing of measures aimed at curbing Covid-19 spread. The move boosted economic recovery especially for hardest-hit sectors such as hospitality, retail as well as transport and logistics.

The economy grew 9.9% year-on-year during the quarter, compared with a contraction of 2.1% in the same period in 2020, according to the Kenya National Bureau of Statistics (KNBS).

Earlier in 2020, the economy was hammered by the effects of the Covid-19 pandemic.

“The Committee noted the robust implementation of the FY2021/22 Government Budget, particularly the strong rebound in revenue performance to December 2021 reflecting the pickup of economic activity and improvement in the business environment,” Dr Njoroge said after its meeting.

“The continued rollout of the Economic Stimulus Programme and Economic Recovery Strategy were also noted, and are expected to continue to support the economy.”

The CBK on Wednesday retained the base lending rate at 7% for the twelfth time in a row sparing consumers any increases on the cost of loans at the start of new year.

In late October last year, President Uhuru Kenyatta scrapped a night-time curfew that had been in place since March 2020, in a move that was expected to help reinvigorate the economy.