KCB Bank Group raised its base lending rate from 14.7% to 15.6%.
But even after this hike, they’re still among the cheapest big banks this year.
– Co-operative Bank of Kenya hiked theirs to 16.5%
– Equity Bank Limited is charging 18.24%, even up to 24.7% for risky borrowers
– While NCBA Group landed at 17.5% for Ksh loans and 11.75% for the dollar.
Sadly, these high interest rates are hurting growth in the credit sector.
Loan Defaults are Soaring.
Banks are pulling back on lending to businesses and households.
And there’s no light at the end of this tunnel either.
Also Read: Credit Rating in Africa
Days ago, public hearings for the Finance Bill, 2024 kicked off.
And frankly, this bill is a dis to all the progress we’ve made with financial inclusion.
The bill wants to:
⏫Slap a 16% VAT on all banking transactions- including loans
⏫Increase excise duty on money transfer fees from 15% to 20%
If it goes through, the only way from here is downhill.
Banks, telcos, and fintechs will pass on these new costs to customers.
And the cost of credit will keep heading down the gutter.
Which country keeps piling taxes on businesses, all at once, then slams shut their credit lines?
Businesses rely on credit for working capital.
But now, most of them can barely afford new loans.
And it’s almost impossible to repay the ones they have.
Kenya Bankers Association ni ungwana kweli? 😅
PS- one of my best pieces at Tech Safari breaks down why credit access in Africa is broken.
Written by Mercy Awiti
Source; LinkedIn
