Credit to Kenya’s private sector showed signs of softening in early 2025, reversing last year’s growth trend.
- •Data from the Central Bank of Kenya (CBK) shows total credit advanced between January and April 2025 stood at KSh 15.32 trillion, down 0.88% from KSh 15.45 trillion in the same period last year.
- •April 2025 alone recorded KSh 3.87 trillion in credit, a marginal 0.44% rise from KSh 3.85 trillion in April 2024.
- •While month-on-month growth was positive, it failed to offset weaker volumes posted in the first quarter. The average monthly credit issued in the first four months of 2025 was KSh 3.83 trillion, compared to KSh 3.86 trillion in 2024, the first early-year decline since 2022.
Sectoral performance shows uneven recovery
A deeper dive into April’s sectoral performance shows uneven momentum across industries. Credit to agriculture rose by KSh 16.7Bn, up 12.2% year-on-year. Trade and building and construction also recorded gains of KSh 35.6Bn (+5.5%) and KSh 8.3Bn (+5.8%) respectively. Credit to real estate grew 3.1% to reach KSh 458.6Bn, while consumer durables rose 18.8% to KSh 494.5Bn, the largest increase among all sectors.
On the other hand, lending to manufacturing shrank by KSh 5.1Bn (-0.85%) while transport and communications contracted by KSh 2.3Bn (-0.64%). Finance and insurance recorded a steeper decline of KSh 13.3Bn (-8.3%), reflecting continued caution in the sector. Mining and quarrying dropped KSh 12.2Bn, a 37% decline, marking the sharpest contraction in percentage terms.
Meanwhile, credit to private households dropped by KSh 9.1Bn, and business services fell by KSh 14.6Bn, pointing to weaker consumption and enterprise activity. These two segments had shown strength throughout 2024, but their reversal adds weight to the broader slowdown.
The data suggests a tightening credit environment in 2025, likely shaped by elevated interest rates and more conservative risk assessments by banks. Lending patterns reflect not only sectoral risk perceptions, but also underlying economic activity.
Total private sector credit grew only 0.44% year-on-year in April 2025, the slowest April growth since 2021. The CBK’s tight monetary stance, aimed at stabilizing inflation and the exchange rate, may have limited banks’ lending capacity or borrower appetite.
Default levels reach record highs
The strain in private sector credit is also mirrored in rising defaults. Kenya’s gross non-performing loan (NPL) ratio rose to 17.60% in June 2025, the highest level on record since 2015. The ratio has climbed steadily from 14.80% in December 2023, with each quarter in 2024 and 2025 marking new highs. The sharpest surge occurred in the first half of 2024, as borrowers struggled under tighter liquidity and elevated cost pressures.
This historic rise in NPLs suggests that banks are increasingly exposed to credit risk. Core sectors like trade, manufacturing, and services continue to register high delinquency levels, which could constrain further lending. The combination of sluggish credit growth and record-high NPLs signals worsening private sector health and growing stress in the banking system.
