Since March last year, the borrowing trend has changed as a majority of Kenyans are forced to rethink their budgets while businesses are either laying off workers and reducing expenses, or all together closing down.
Many expected that the situation would get worse as the world is still facing the consequences of the pandemic but a report by the Central Bank of Kenya on credit extended to the private sector players paints a bright economic future for the country.
In the first quarter of 2021, lending to households increased by Sh39bn compared to the previous quarter (Q4 2020) where it only increased by 9.7bn thanks to increased use of digital platforms as well as a focus on individual borrowers by banks according to the report.
While households had an advantage, the business climate was harsh for the corporate sector which saw a slow down as businesses focused more on the repayment of loans. Lending to corporates increased by Sh15.8bn in Q1 2021 compared to the previous quarter where the figure was Sh29.5bn.
Nonetheless, the report reveals that all sectors registered positive credit flows reflecting improved demand as economic activities picked up in the first two months of the quarter. Notable growth in credit was registered in sectors such as manufacturing and trade as well as building and construction, finance and insurance. On an annual basis, growth in lending to the private sector proved resilient as it stood at 7.7% as compared to 8.4% in December 2020. The resilience was mainly supported by the accommodative monetary policy, improved economic activity and other policy measures by government to mitigate the adverse impact of COVID-19 on the economy