Kenya’s private sector growth down 7.8% on COVID-19 ravages
Kenya’s private sector credit growth declined in 2021 coming in at an average of 7.8 percent compared to 8 percent growth recorded same period last year, according to the Central Bank of Kenya (CBK).
This has been attributed to the cautious lending strategy adopted by banks during the COVID-19 operating environment.
According to Cytonn Investment, the high cost of credit remains one of the main challenges that hinders credit growth with the big banks charging a higher cost of credit in comparison to smaller banks reflecting their strong pricing power based on a wide distribution network, multiple services and well established brands.
On the other hand, small banks have to compete for customers by offering relatively cheaper credit in order to grow their loan book.
In three months to March 2021, CBK says Non-Performing Loans (NPL) remained unchanged in six economic sectors and increased in five sectors.
The sectors with increased NPLs were Personal and Household, Real Estate, Transport and Communication, Tourism, and Trade. The increase in NPLs was mainly due to a challenging business environment caused by coronavirus.