The uptake of credit is likely to be slow in the early months of 2024, dampened by low business activities due to multiple taxes, expensive foreign currency as well as high interest rates.
- According to Central Bank of Kenya’s January 2024 Market Perception Survey, 79 percent of the respondents expect economic uncertainty to drive banks to become more cautious to minimize the risk of default.
- The survey found that 67 percent of bank respondents expect moderate to high demand for credit in February and March 2024.
- This will primarily be driven by working capital requirements and back to school financing.
91 percent of the respondents indicated that the prevailing economic conditions could impact negatively on credit appetite and trade activities, and cause importers to adopt a wait and see attitude, and businesses and consumers to be more cautious, hence slow demand for credit. These conditions include including depreciation of the local currency, increase in interest rates, commodity and raw material prices, distribution, logistics and fuel costs and high inflation.
Banks expect to hire in 2024 as they expand services and strengthen capacity to support business growth. Non-bank respondents, on the other hand expressed mixed expectations on hiring, citing challenges in the economy.