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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Kenya central bank roots for risk-based lending to expand credit   

NAIROBI (Xinhua) -- The Central Bank of Kenya (CBK) has urged commercial banks to embrace risk-based lending to expand credit to the private sector.

CBK Governor Patrick Njoroge told a media briefing in Nairobi that growth of credit to the private sector in 2017 is below levels recorded in the past two years.

“We are pushing for banks to improve their lending practices in order to spur growth of credit to the private sector,” Njoroge said. “One way to expand credit to the private sector is if banks price interest of loans according to the level of risk.”

Since the introduction of interest caps of 4 percent by commercial banks above the Central Bank rate, there has been a decline in access to credit.

The governor said the private sector plays a key role in the economic development of the country.

“We therefore want the private sector to have access to affordable credit in order to fund their operations,” he said.

Njoroge said that banks should utilize consumer credit history in order to determine borrowers’ credit risk.

“Those with a history of repaying their loans on time should access loans at lower interest rate as compared to those with a negative history,” he said.

The central bank has also launched an awareness campaign to increase transparency in the lending sector.

“We want consumers to have more information on the lending rates of banks so that they can make better borrowing decisions,” Njoroge said, urging banks to change their business models and become more customer centric.

 

Central bank retains benchmark rate at 10 pct

NAIROBI, (Xinhua) -- The Central Bank of Kenya (CBK) on Monday maintained the benchmark lending rate at 10 percent in order to anchor inflation expectations.

CBK Governor Patrick Njoroge, who chaired the Monetary Policy Committee (MPC), said that an MPC Private Sector Market Perception Survey conducted in September shows that inflation was expected to decline due to lower food prices occasioned by the expected short rains and government subsidies on some food items.

“The committee has therefore concluded that the current policy stance remains appropriate,” Njoroge said in a statement. “However, the CBK will continue to closely monitor developments in the global and domestic economy, and stands ready to take additional measures as necessary.”

The MPC met on Monday to review the outcome of its policy decisions and recent economic developments against a backdrop of general macroeconomic stability, a prolonged election period, and continued uncertainties in the global economy.

Month-on-month overall inflation rose to 8 percent in August, from 7.5 percent in July, reflecting limited supply of some food items, particularly tomatoes, following transport difficulties in the immediate period after the general elections.

The governor said that non-food-non-fuel (NFNF) inflation has remained stable below 5 percent, suggesting that demand pressures in the economy were muted.

The foreign exchange market has remained relatively stable, supported by resilient tea and horticultural exports, diaspora remittances, and a strong recovery in tourism, Njoroge said.

The 12-month current account deficit widened slightly to 6.4 percent of gross domestic product (GDP) in July 2017, from 6.2 percent in May, largely due to short-term import demand for cereals and sugar, and Standard Gauge Railway (SGR) related transport equipment, he said.

 
NAIROBI, (Xinhua) -- Central Bank of Kenya (CBK) Governor Patrick Njoroge addresses the press in Nairobi, capital of Kenya, Sept. 18, 2017. CBK on Monday maintained the benchmark lending rate at 10 percent in order to anchor inflation expectations. Patrick Njoroge, who chaired the Monetary Policy Committee (MPC), said that an MPC Private Sector Market Perception Survey conducted in September shows that inflation was expected to decline due to lower food prices occasioned by the expected short rains and government subsidies on some food items. XINHUA PHOTO: CHARLES ONYANGO

“However, the current account deficit is expected to narrow to 5.8 percent of GDP by December 2017 as the bulk of SGR-related imports are completed, while the expected favorable weather conditions will improve food production and reduce reliance on imports,” Njoroge said.

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EARLIER REPORT:

Kenya launches World Bank backed off-grid electricity project

NAIROBI, (Xinhua) -- Kenya on Tuesday launched the 150 million U.S. dollar World Bank-backed Kenya Off-Grid Solar Access Project (KOSAP) that aims to expand electricity access to all parts of the country, a government official said.

Principal Secretary in the Ministry of Energy and Petroleum Joseph Njoroge told a media briefing in Nairobi that approximately 690,000 households in 14 counties will benefit from the project.

“KOSAP will involve setting up mini-grids in areas that are not currently connected to the national electricity grid,” Njoroge said.

The project is part of government efforts to ensure the East African nation achieves universal electricity access by the year 2020.

Data from the Ministry of Energy and Petroleum indicates that 6.2 million households are connected to electricity, representing 70 percent of the population.

Njoroge said that there are some regions in the country mainly in the arid and semi-arid areas of the north that are not connected to the electricity grid.

“This is because the cost of electricity infrastructure is very expensive given large distances and low population densities. As a result these households are forced to use kerosene for lightning and cooking,” he said.

The project aims to compliment the Last Mile Connectivity Project that subsidizes households to access the national grid.

Sudeshna Banerjee, Practice Manager, for World Bank’s Global Energy and Extractives Practice for the African Region said that the project leverages the strengths of Kenya’s dynamic private sector, omnipresent mobile telephony, emerging off-grid business models to create development impact for its citizens.

Banerjee said that the country’s electricity grid footprint remains largely localized in the central belt of the country where 80 percent of the population lives.

             

 

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