Browsing: Central Bank of Kenya

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.…

Credit market in Kenya

Kenya’s private sector and households are grappling with costly credit, a government report now indicates, curtailing key investments by firms and individuals despite a stable financial sector. One of the main criticisms of the credit market in Kenya is that the cost of credit and the interest rate spread by the banking sector is high.
On average, the annual interest rate for the Kenyan banking sector is within a range of 12 per cent to 14 per cent for various categories of loans offered, according to the Kenya Economic Report 2023 by the Kenya Institute for Public Policy Research and Analysis (KIPPRA).…

Kenya's Debt Repayment
  • Businesses in Kenya are facing the impact of tightened monetary policy that is resulting in high lending rates.
  • The government is under increasing pressure from investors to settle huge pending bills.
  • At the same time, the Kenya Shilling is steadily losing ground against major world currencies, piling pressure on external debt obligations.

In the second half of the year, business optimism for companies and sectoral growth prospects in Kenya appears to be subdued, largely influenced by the dual challenges of high taxes and a weakening Shilling.

The government's task of balancing rising debt levels with tax revenue generation is taking center stage in a scenario complicated by other economic factors.

A confluence of high-interest rates within the banking sector, a politically sensitive environment, the accumulation of pending bills that impact private sector cash flow, and the depreciation of the Kenyan Shilling is painting a complex business environment.

The Shilling has…

Non-performing loans

On 15 May, President William Ruto nominated Kamau Thugge as the new governor of the Central Bank of Kenya (CBK). If the Senate and the National Assembly ratify the appointment, Thugge will begin his first term as the CBK governor in mid-June. He will replace the incumbent Patrick Njoroge who assumed office as CBK governor in 2015.

The nomination of Thugge comes at a pivotal time for the Kenyan economy. Kenya’s inflation remains high at almost 8 per cent. The Kenyan shilling has also hit all-time lows against the US dollar. Thus, the monetary policies from the CBK will most likely come in handy in the coming months. But what makes Thugge the perfect fit for the crucial role of Kenya’s top banker?…

Kenya: Banking sector assets grow by double-digits as purchase of government securities rise
  • The Monetary Policy Committee (MPC) on Wednesday noted the sustained inflationary pressures, the elevated global risks and their potential impact on the domestic economy.
  • CBK sees a scope for a further tightening of the monetary policy in order to anchor inflation expectations.
  • Overall inflation in Kenya increased to 9.2 percent in February 2023 from 9.0 percent in January, mainly driven by higher food prices.

The Central Bank of Kenya (CBK) has revised upwards the benchmark rate by 75.0 basis points to 9.50 per cent, in its latest move to try and tame the rising inflation in the country.

This is up from 8.75, signaling a higher cost of borrowing in the market.

Its decision making organ–the Monetary Policy Committee (MPC) on Wednesday noted the sustained inflationary pressures, the elevated global risks and their potential impact on the domestic economy, and concluded that there was scope for a further tightening of …

Flutterwave-Fintech
  • Olugbenga Agboola, co-founder and CEO of Africa’s largest fintech company, Flutterwae fintech, purchased a Miami beach house valued at $7.1 million.
  • Flutterwave’s raised $250 million in February 2022 at a valuation of $3 billion making it one of the few unicorns in Africa.
  • The fintech has faced legal and regulatory hurdles in Kenya including the freezing of $40m held by Flutterwave on money laundering allegations.  

Olugbenga Agboola, co-founder and CEO of Africa’s largest fintech company, Flutterwae fintech, purchased a Miami beach house valued at $7.1 million. This purchase raises various questions after the Nigerian fintech company was allegedly hacked resulting in a $4.2 million loss.

Business Insider Africa reported tha Agboola had purchased a six-bedroom, seven-bathroom house in Miami beach. According to official records, the property was previously owned by the Boschetii Group, a real estate development firm. They purchased the plots for $1.2 million in 2021 and built

US Dollars
  • The government of Tanzania has responded to claims that Kenyan companies are now obtaining dollars from Tanzania
  • Kenya is currently experiencing a severe dollar shortage as a result of massive international debt repayments
  • The Bank of Tanzania (BoT) is monitoring and evaluating the foreign exchange market to ensure compliance with all applicable laws and rules

The government of Tanzania has responded to claims that Kenyan companies are now obtaining dollars from Tanzania to fulfil their obligations to manufacturers and general goods importers.

Kenya is currently experiencing a severe dollar shortage as a result of massive international debt repayments, which caused its foreign exchange reserves to fall to a level that was below the key level of four months’ import coverage.

Lawrence Mafuru, the Deputy Permanent Secretary in the Ministry of Finance and Planning, stated in Dar es Salaam yesterday that the Foreign Exchange Act and rules govern the nation’s foreign …