Person counting money in Kenya

The banking sector should prepare Kenyan borrowers for hard times ahead, as most banks said they are going to be conservative when granting credit.

The Central Bank of Kenya (CBK) disclosed this in the Market Perceptions Survey, which was made public on February 9.

Thirteen microfinance banks and thirty-two commercial banks were polled for the research, and most of them said they would exercise caution when financing the private sector.

According to the study, 79% of participants anticipated that banks would become more cautious when financing the private sector due to economic uncertainties brought on by the high cost of living.

In order to reduce the danger of default, the banks said that this was unavoidable.

It was predicted that high interest rates, many levies, and the high cost of doing business (high foreign exchange) would all hinder the expansion of private sector lending in 2024.

CBK surveyed commercial banks to find out how much they anticipated increasing loans to the private sector by the end of 2024 as opposed to the end of 2023.

In 2024, the banks anticipated steady expansion in credit to the private sector, notwithstanding their reluctance to provide loans.

Seventy-one percent of banks predicted that more Kenyans would request financial help in 2024, according to the Market Perception Survey.

A portion of this might be attributed to the rise in demand for short-term loan facilities brought on by higher working capital needs.

Due to increased operating expenses brought on by the high cost of living, more Kenyans would turn to commercial banks in search of better lending conditions.

An increase in the cost of commodities and raw materials, the devaluation of the local currency, and the need for companies to remain solvent are other reasons that would encourage more Kenyans to apply for loan facilities. 

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