Kenyan banks have been called upon to lower cost of credit to consumers following to sustain growth amid global shocks triggered by higher energy prices.
National Treasury Cabinet Secretary John Mbadi said despite the Central Bank of Kenya lowering the Central Bank Rate by 4 percentage points since mid-2024, the average lending rate remains at 14.4%.
“Borrowers should feel more of that cut and second, lend to the real economy,” said Mbadi during the 2026 NCBA Economic Forum.
He added, “Government is now borrowing less from the banks and that freeze room on your balance sheet. We expect that room to go to the business, farmers, manufacturers and Micro Small and Medium Enterprises.”
This comes amid rising inflation which has risen to 7.3% in October owing to rising cost of fuel and could be impacted further by the war in Middle East which has disrupted energy supply routes.
According to projections by the NCBA Group, Kenya is expected to register 4.8% GDP growth this year and reduce to 4.5% next year due to weak growth in the services and industry which will only register 4.5% and 4.8% growth down from 5.3% and 5.2% respectively.
“Kenya has remained resilient year-to-date, supported by steady growth, government spending, stable interest rates, domestic and FX liquidity, and access to external commercial markets,” said Raphael Agung’, NCBA Group Director for Global Markets
Policymakers argue to overcome the global shocks and register robust economy to deliver much needed jobs, Kenya needs to target an annual growth of at least 6%,
However, World Bank Division Director Dr Qimiao Fan said growth vulnerabilities still remain given pressures on public finance and fiscal deficit stemming from high public debt.
“Consistent fiscal deficit and high debt service cost obviously constraints fiscal space while growing reliance on domestic borrowing crowds out private sector investment and increases the risks between fiscal policy and financial sector conditions,” said Dr Fan.
Kenya’s public debt which has grown to Ksh 13.5 trillion now makes up more than 70% of Kenya’s GDP while interest payments absorb an estimated one third of government revenue.
NCBA Groups projects Uganda, Rwanda and Tanzania to outperform Kenya next year with a growth of 7%, 7% and 6% respectively.
