Browsing: Central Bank of Kenya

Remittances Drop by $32.8 Million
  • Remittances to Kenya dropped by $32.8 million as the economies in the source markets continued to grapple with higher inflation.
  • Education, healthcare, and household needs are the main uses of remittances in Kenya, an analysis by WorldRemit indicates.
  • The shilling’s exchange rate against the dollar has not been stable in the period under review

Kenyans working and living abroad sent home $32.7 million (KSh4.3 billion) less in June compared to the previous month. Latest monthly data by the Central Bank of Kenya (CBK) show remittance inflow for the month totaled $371.6 million (KSh48.48 billion), an 8 per cent decline from the previous month when remittance inflow totaled $404.4 million (KSh52.76 billion).

However, compared to the same period last year, the receipts in June were a 7.4 per cent increase compared to the $345.9 million or (Sh45.1 billion) reported during the comparable month in 2023.

“The cumulative inflows for the 12

mobile money
  • Central Bank of Kenya says active mobile subscriptions hit 66.8 million by December 2023 compared to 65.7 million a year earlier.
  • Increasing usage of mobile money saw the banking industry in Kenya experience a drop in the value of banking transactions via bank agents to $10.5 billion.
  • Kenya is a trailblazer in the adoption and usage of mobile money across Africa.

A steady rise in the use of cashless transactions as well as the opening of 8,555 new mobile money agent shops in Kenya drove the value of mobile money transactions up by 13.8 percent to record KSh788.35 billion or $6 billion in 2023.

Kenya has been a trailblazer in the adoption and usage of mobile money across Africa since the launch of pioneer cash transfer platform M-PESA by Safaricom PLC in 2007.

“Amidst the increasing adoption of technology and the widespread use of mobile phones in daily life, coupled …

private capital
    • Output rises at the sharpest rate in 20 months.
    • New order volumes strengthen.
    • Input costs fall for the second month in a row.

    Kenya recorded an improvement in private sector business conditions during May, as falling cost burdens and rising new business contributed to a solid expansion in activity.

    The Latest Stanbic Bank Kenya Purchasing Managers’ Index indicates that activity’s upturn was the sharpest in 20 months, as was input buying growth.

    Job creation continued at a mild pace even as reductions in fuel prices and import costs led to a further drop in overall input prices in May, after the first decrease in nearly four years during April.

    Selling prices started to rise again, albeit slowly. The Purchasing Managers’ Index (PMI). Readings above 50.0 signal improved business conditions in the previous month, while readings below 50.0 show a deterioration.

    The latest headline PMI reading of 51.8 marked the index’s

Kenya's private sector
  • Kenya’s private sector enjoyed a much more stable business environment in April amid continued job creation in the market, with the country enjoying the lowest inflation in two years.
  • Employment growth continues as the country’s economy remains on a growth trajectory.
  • The headline PMI registered fractionally above the 50.0 neutral mark at 50.1 in April, up from 49.7 in March.

Kenya’s private sector enjoyed a much more stable business environment in April amid continued job creation in the market, with the country enjoying the lowest inflation in two years.

The latest Purchasing Managers’ Index by Stanbic Bank depicted broadly steady operating conditions across the sector during the month, as order book volumes and output levels have changed little since March.

The 12-month outlook continued to rebound sharply from February’s record low, and employment growth was maintained, as the country’s economy remained on a growth trajectory.

World Bank has projected Kenya’s

High-interest rates
  • Kenya’s high-interest rates hit 13 per cent in the last review by the Central Bank of Kenya.
  • Since mid-2023, however, the World Bank’s index of commodity prices has remained essentially unchanged.
  • World Bank reiterates that between mid-2022 and mid-2023, global commodity prices plummeted by nearly 40 per cent.

Kenyan consumers will have to bear the high cost of borrowing for much longer as Central Banks will not loosen their monetary policies any time soon, the World Bank has said.

The lender says the continued tightening will be a result of the prevalent global economic shocks, such as the Middle East conflict, which is threatening to halt the inflationary decline that has occurred in the past two years.

“Global commodity prices are leveling off after a steep descent that played a decisive role in whittling down overall inflation last year,” the World Bank says in its latest commodity markets outlook. “However,

Kenya's economic resurgence in 2024
  • Kenya’s economic resurgence in 2024 proving a reality following a notable upturn in recent months, marked by positive indicators across sectors.
  • According to CBK, leading indicators point to the continued strong performance of the Kenyan economy in the first quarter of 2024.
  • According to the World Bank, Kenya’s economic growth is projected to be 5.2 per cent, boosted by increased investment in the private sector as the government reduces its activities in the domestic credit market.

A strong rebound

Kenya’s economic prospects are looking brighter, attributed to the interventions by the World Bank and the International Monetary Fund, which have played a massive role in easing volatility witnessed less than three months ago.

Major economic indicators in the country show that confidence is slowly creeping back after the government secured the International Monetary Fund’s facility to pay back the Eurobond.

The repayments had triggered volatility in financial markets, including the …

multi-banking in Kenya
  • In Kenya, the level of bank clients running two bank accounts stood at 53% in 2023 compared to 48.2% in the 2022 survey.
  • Industry survey ranks Cooperative Bank as the best overall lender in customer experience in the country followed by regional giant NCBA.
  • The results show that the respondents had an overwhelmingly positive view of their banks.

The competition within Kenya’s banking sector is driving an increasing number of customers to diversify their relationships, opting to hold accounts with multiple institutions, a practice commonly referred to as multi-banking, in order to tap into a range of benefits.

In a 2023 survey, the Kenya Bankers Association (KBA) says 53 per cent of bank customers maintain more than one bank, in a trend that highlights a growing desire for customized convenience in services and products among bank customers.

Growth of multi-banking in Kenya

According to the Banking Industry Customer Satisfaction Survey

non-performing loans in kenya
  • Non-performing loans in Kenya surged to a 16-year high of 15 per cent in August 2023.
  • The Kenya Bankers Association had called for further monetary policy tightening by the CBK, terming it a cure to elevated non-performing loans.
  • According to the CBK data, forex pressure cut lending to the private sector to 8.3 per cent during the review period.

The banking sector regulator has said that Kenya’s private sector players resorted to alternative funding sources to avoid the high lending rates, leading to a drop in non-performing loans during the holiday season.

The continued surge in bank interest rates has hit individuals and businesses hard on the back of the Central Bank of Kenya’s (CBK) elevated benchmark interest rate. This has happened thrice since Governor Kamau Thugge took office, citing the need to support the country’s struggling shilling.

On Tuesday this week, the Central Bank of Kenya increased the benchmark …

fixed-income securities
  • Rising volatility in Kenya’s Fixed Income Market derives from a combination of global and domestic factors.
  • The yield curve soared fastest at the head and upper belly of the curve, rising by a cumulative 661bps on the three-month treasury bill.
  • There is hope as it is anticipated, that a rebound in trading activity will happen in 2024.

The Kenyan Fixed Income Market displayed remarkable flexibility last year to experience one of the most rapid annual increases in yields resulting in a notable inversion of the effective yield curve.

According to financial experts, the rising volatility in the fixed income space derives from a combination of global and domestic factors.

On the external front, the rapid monetary policy tightening in 2022 and 2023 led investors to price-in bearish capital gain expectations for bonds.

On the domestic front, the rising concerns around fiscal sustainability indicators, coupled with an elevated inflationary regime in …

the cost of borrowing in Kenya

The loan market in Kenya’s banking sector is going through one of its toughest periods in nearly two decades. With interest rates on the rise and a challenging economic environment, many borrowers—individuals and businesses—are finding it hard to meet their loan obligations.

According to the most recent data from the Central Bank of Kenya (CBK), the proportion of loans that are not being repaid, known as non-performing loans (NPLs), reached 15.0 percent in August 2023, up from 14.2 percent in August 2022. This represents more than $4 billion (Ksh596 billion), the highest it has been in 18 years. The last time Kenya experienced such a high level of loan defaults was back in 2005, when it reached nearly 30 percent.…