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CBK Retains Benchmark Lending Rate At 7 Percent

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Central Bank of Kenya (CBK). [Courtesy]

The Central Bank of Kenya (CBK) has retained the Central Bank Rate at seven percent, terming the current monetary policy appropriate.

In a statement, CBK governor Dr Patrick Njoroge said that the foreign exchange reserves stood atUSD8,605 million, a 5.22 months of import cover.

Month-on-month overall inflation remained stable at 4.4 percent in August and July 2020, and is expected to remain within the target range in the near term.

The banking sector remains stable and resilient, with strong liquidity and capital adequacy ratios according to CBK. The ratio of gross non-performing loans (NPLs) to gross loans stood at 13.6 percent in August, compared to 13.1 percent in June. NPL increases were noted in the real estate, personal and, transport and communication sectors, due to a subdued business environment.

Total loans amounting to Ksh1.12 trillion have been restructured (38 percent of the total banking sector loan book of Ksh2.9 trillion) by the end of August, in line with the emergency measures announced by CBK on March 18 to provide relief to borrowers. Of this, personal/household loans amounting to Ksh271 billion (33 percent of the gross loans to this sector) have had their repayment period extended. For other sectors, a total of Ksh849.9 billion had been restructured mainly to trade (20.7 percent), manufacturing (20.2 percent), real estate (18.3 percent) and agriculture (11.1 percent).

Read: 75% Of Small, Medium Businesses At Risk Of Collapsing

“Of the Ksh35.2 billion that was released by the lowering of the Cash Reserve Ratio (CRR) in March, Ksh32.4 billion (92 percent) has been used to support lending, especially to the tourism, trade and transport and communication, real estate and manufacturing sectors,” said Dr Njoroge.

Strong growth in lending was observed in manufacturing (13.1 percent), transport and communications (19.0 percent), trade (8.1 percent) and consumer durables (13.7 percent).

Exports of goods have remained robust despite the pandemic, growing by 0.8 percent in the period January to August 2020 compared to a similar period in 2019. Receipts from tea exports over this period rose by 17.1 percent with increased output.

Flower exports for the period September 1 to 27 were 141.3 percent of the volume in September 2019.

Remittances were strong at USD274.1 million in August 2020 compared to USD214.3 million in August 2019. For the eight months to August 2020, remittances were higher by 6.6 percent compared to a similar period in 2019. However, receipts from services exports remained subdued, declining by 22.4 percent in the period to August 2020, reflecting weaknesses in international travel and transport.

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Written by Francis Muli

Senior reporter at Kahawa Tungu, Muli has a passion for human interest stories. Believes in unearthing societal rots that have been hidden from the public eye.
Follow me on Twitter @FmuliKE. Email

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