- Microfinance banks (MFBs) are even more bullish, projecting a credit growth of 29.4 per cent, compared to 13.1 per cent in January.
- Private sector credit grew at a six-year high of 9.5 per cent in February.
Banks and microfinance lenders were more bullish in March about the prospects of higher growth in credit to the private sector compared to the beginning of the year, betting on renewed borrowing by businesses looking for working capital to recover from the impact of Covid-19 pandemic.
The periodic market perceptions survey carried out by Central Bank of Kenya (CBK) ahead of the March monetary policy committee (MPC) meeting found that commercial banks project 12-month private sector credit growth at 11.3 per cent by the end of this year, compared to a projection of 10.1 per cent in the January survey.
Microfinance banks (MFBs) are even more bullish, projecting a credit growth of 29.4 per cent, compared to 13.1 per cent in January.
Private sector credit grew at a six-year high of 9.5 per cent in February.
"About 39 per cent of respondents expected credit to private sector to increase as banks respond to the need to support sectors affected by the pandemic, including SMEs, through development of innovative credit products," said the MPC survey.
"Banks cited risks to private sector credit growth including the impact and uncertainty of the Covid-19 pandemic which has elevated credit risks significantly, possible retrenchments, extended pay cuts for individuals and staff sent on unpaid leave, and delays by both National and County governments in settling pending bills."
In order to achieve these credit growth numbers however, the economy will have to first weather the negative effects of the new tougher anti-Covid restrictions announced by the government towards the end of March.
The survey was done in the first three weeks of last month, which was before the announcement of the restrictions.
The new curbs include a zoned lockdown in Nairobi, Nakuru, Kiambu, Machakos and Kajiado, longer curfew hours and closure of bars.