9th August, 2016
Internal financing, issuance of debt securities and cost of borrowing are among the factors affecting demand for credit in Kenya. A quarterly survey by the central bank of Kenya introduced to identify potential drivers of credit risk looked at demand for credit, credit standards, interest rates, non-performing loans and credit recovery efforts. It shows that in the first quarter of 2016, there was increased demand for credit. Demand for credit in trade stood at 63 percent, building and construction at 51 percent, personal or household demand at 58 percent and real estate at 45 percent. The survey also noted that 69 percent of banks held interest rates constant, 23 percent decreased their rates, while 8 percent of banks increased their interest rates. Banks that held their rates constant attributed it to a stable macro-economic environment while those that raised rates justified it with increased cost of funding