Kenyan businesses have been challenged to leverage current lower interest rates and engage actively with banks to access credit, even as the Central Bank of Kenya (CBK) advocates for Risk Based Credit Pricing (RBCP) in the country.
This comes on the back of an ongoing surveillance by the regular to confirm if indeed banks (punishment for non-compliance) are complying with its CBR that has since been slashed to 10.75 percent after the February MPC meeting.
Raimond Molenje, CEO of the Kenya Bankers Association (KBA), wants businesses to make use of the favourable rates, a remark he made during the launch of the KBA 2024 Banking Customer Satisfaction Report on Feb 12, 2025 in Nairobi.
Molenje said small and medium enterprises (SMEs) – vital to the Kenyan economy, must seize the opportunity to access loans at reduced rates following the recent interest rate cut by the CBK.
“Customers now need to engage with various banks just to ensure they are taking up loans and growing their businesses because we need to thrive and build the economy.
Our customers have been crying to banks about interest rates. So to our customers, the interest rates are coming down across all banks. Rest assured, we want you to succeed as well as the economy to grow,” Molenje said.
SMEs in Kenya have faced significant financial challenges due to high credit costs, rising input costs, weak consumer demand, and liquidity issues.
Reduced rates will, along the way, help them recover and expand.
Several commercial Currently banks, among them Kenya Commercial Bank (KCB) and Co-operative Bank of Kenya, DTB and NCBA have complied with the CBK’s new directive.
KCB reduced its lending rate from 15.6% to 14.6%, effective February 10, 2025. The new rates will apply to existing loans starting March 10.
Equity Bank followed suit to announce a 300 basis point (3 percent) reduction in interest rates for all new and existing Kenya Shilling-denominated credit facilities. The bank’s new lending rates will feature a revised Equity Bank Reference Rate of 14.39 per cent along with a margin based on individual customer risk profiles
Similarly, Co-operative Bank lowered its average lending rate from 16.5% to 14.5%, directly benefiting borrowers.
With SMEs contributing around 40% to Kenya’s GDP, their recovery is crucial for the country’s economic prospects.
The KBA’s report noted that the banking sector is evolving, adapting to customer needs, and enhancing its services. One key trend identified in the 2024 Banking Customer Satisfaction Survey is the growing preference for digital banking solutions.
The report shows that 42.86% of respondents prioritize mobile banking app functionality, showing the demand for convenient, user-friendly digital banking experiences.
Additionally, 14.29% of customers value internet banking, indicating a strong shift toward self-service online platforms.
