For the first time since 2017, private sector credit growth recorded double-digit growth in quarter one of this year according to the latest data from the Central Bank of Kenya.
The regulator attributes the growth to the change in law that reversed interest rates controls in November 2019 and a recovery of the economy due to easing of Covid-19 restrictions. The sectors that have seen increased funding from banks are manufacturing, trade, households, transport and communications, and the real estate sector.
Reduced Credit Uptake
In its financial sector stability report for 2021, the Central Bank also warns that tightening of lending standards by banks could lead to an increase non-performing loans and reduce credit uptake.
Since the third quarter of 2021, Kenyan banks have significantly reduced lending to individuals and small businesses citing the difficulty in evaluating their creditworthiness. In September 2021, the Government implemented a moratorium on the negative listing of borrowers with loans below Ksh 5 million by credit reference bureaus (CRBs) for a year, hence cutting credit information sharing in the banks.
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