Credit to traders up 136pc as banks loosen purse strings


Business loan concept. FILE PHOTO | NMG

Traders secured bank loans at the fastest pace amongst six top borrower categories, signalling a gradual recovery in consumer demand.

A breakdown of the latest data from the Central Bank of Kenya (CBK) indicates that net credit to traders grew by 136 percent to Sh41.5 billion in 2021 compared with a year earlier when retail and wholesale stores cut operating hours due to nighttime curfew.

The increased uptake of new bank credit by traders pushed up their stock of loans to Sh526.5 billion — making up slightly more than 17.2 percent of Sh3.05 trillion held by the private sector last December.

Trade, household, manufacturing, real estate, transport and communications and loans advanced on the strength of consumer durables such as appliances, furniture and office equipment made up 78 percent of net Sh241.9 billion loans extended to the private sector last year.

However, credit to the real estate, largely home loans, suffered the deepest slide of 92 percent to Sh2.6 billion compared with Sh30.2 billion a year earlier.

Real estate developers have for years been battling dipping sales and rental prices with the onset of the Covid-19 pandemic exacerbating defaults in the mortgage loan book which is largely advanced on strength of payslips.

Loans advanced to households on account of their income, largely salaries, also fell 11 percent to Sh17 billion, while those taken using household appliances, furniture and office equipment — consumer durables —as security dropped 2 percent to Sh43.7 billion.

Net credit to the manufacturing sector went up 22 percent to Sh53.7 billion, while the flow to transport and communication increased 19 percent to Sh30.2 billion on the back of increased mobility after travel restrictions were eased.

Kenya’s economy rebounded last year from a 0.31 percent contraction in 2020. The easing of Covid restrictions boosted recovery, especially for hardest-hit sectors such as hospitality, retail as well as transport and logistics.

“Most banks have been making progress in new products and have also put in new energy in their relationship with SMEs…they have realised that going forward, the game in town is SMEs,” CBK Governor Patrick Njoroge told a press briefing in January.

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