NAIROBI (Xinhua) --
The Central Bank of Kenya (CBK) said on Wednesday
that the growth of credit to the private sector is slowing down.
CBK Governor Dr
Patrick Njoroge told journalists in Nairobi that in June 2015
credit to the private sector grew by 18 percent but has slowed
down to seven percent by end of June 2016.
“We suspect that one
of the reasons is because the private sector prefers to get
credit from other sources other than banks,” Njoroge said.
“We have been
monitoring the growth of credit and we expected to see an annual
growth of between 12 to 15 percent,” he said. He noted that a
slowdown in credit normally indicates that overall economic
growth is also slowing.
“We don’t think that
Kenya is experiencing an economic slowdown because all
indicators should that economic growth is accelerating,” he
According to the CBK,
the banks are also experiencing an increase in the percentage of
non performing loans. “This is related to the lethargic growth
in private sector credit,” Njoroge said.
The governor noted
that despite the temporary ban on licensing of new banks, they
have received interest from at least eight international banks
wishing to set up base in Kenya.
“This is because of
Kenya’s well developed financial sector that make it a regional
hub for east and central Africa,” he said.
effects of the recently passed interest rate capping law, the
CBK said that it will affect monetary policies of the country.
Njoroge said that
risky borrowers could be cut off from accessing loans from
formal financial institutions.