Rotich: Finance sector grew faster despite low credit
Kenya financial sector performance increased faster last year compared to 2017, growing by 5.6 per cent up from 3.1 per cent.
This is despite the fact that credit to the private sector growing at a slower pace and the Nairobi Securities Exchange declining.
Insurance premiums recorded growth as well as Saccos even as banks fed into Treasury’s appetite for local debt while abandoning the private sector.
“Despite the high liquidity ratio, I note that there was a slowdown of 1.9 per cent in the domestic credit uptake by the private sector in 2018 compared to 4.1 per cent growth in 2017. This is attributed to the capping of the interest rates. There is need, therefore, for the review of the interest rate capping,” Finance Cabinet Secretary Henry Rotich said.
The CS, however, got it wrong as according to the Kenya National Bureau of Statics, data credit to the private sector recorded a 2.4 per cent growth (Sh2.42 trillion) compared to a growth of 3.9 per cent as at December 2017 (Sh2.36 trillion).
Money to agriculture, the backbone of the economy, declined from Sh84.6 billion to Sh83 billion. Also starved of credit was mining and quarrying that saw a Sh1.7 billion decline in credit.
Money to transport storage and communication sector declined from Sh190.5 billion to 172.6 billion, while real estate saw a marginal decline from Sh370 billion to Sh368 billion.
However, credit to manufacturing sector increased by 6.5 per cent to Sh334.6 billion while wholesale and retail trade, hotels and restaurants, increased by 2.9 per cent to Sh429.3 billion.
In the public sector, commercial banks credit to the National Government increased by 16.9 per cent to Sh956.3 billion while credit advanced to the counties increased by 9.2 per cent to Sh4.3 billion.
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financial sector performanceTreasury CS Henry Rotich2019 Economic Survey