Credit uptake up as CBK maintains lending rate at 7%
The growth in lending to the private sector in the country went up 7 percent in August this year, from 6.1 percent in July owing to an increase in economic activities despite COVID-19 disruptions.
According to the Central Bank of Kenya (CBK), growth in the private sector was witnessed in the areas of transport and communication sector which went up 11.8 percent followed by manufacturing at 9.3 percent.
Other sectors which witnessed an increase in economic activity included finance and insurance (7.7 percent), business services (5.8 percent), and consumer durables (20.1 percent).
The regulator said uptake of loans was noted with regards to lending under the Credit Guarantee Scheme that was operationalised in October 2020.
This came as Kenya’s economy contracted for the first time in nearly three decades when the coronavirus pandemic hit the key sectors, including tourism, education, transport and manufacturing.
Kenya’s output or Gross Domestic Product (GDP) declined by 0.3 percent in 2020.
- Kenya’s economy contracted by 0.3% in 2020
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The economy, which grew 5 percent in 2019, exited a recession in the last quarter of 2020 after posting marginal growth of 1 percent in the three months through December.
At the height of the coronavirus pandemic last year, President Uhuru Kenyatta rolled out a Ksh.53.7 economic stimulus package which CBK’s Monetary Policy Committee (MPC) said is expected to boost domestic demand.
MPC said there was “progress in the implementation of the FY2021/22 Budget, and in particular, the improved revenue performance with the continued pick up of economic activities.”
The Committee will, however, keep an eye on the inflationary pressures both domestically and internationally even as CBK said inflation remained anchored within the target range in the medium term.
CBK believes the current accommodative monetary policy stance remains appropriate, even as it chose to retain the benchmark lending rate at 7 percent for the 10th time since last year.