NAIROBI (Xinhua) --
The level of loans given by Kenyan banks has been
assessed to be healthy in a new briefing by the Nairobi-based
regional investment house Standard Investment Bank.
Economic growth in
Kenya has slowed in the last four months because of the general
elections and a repeat of the presidential election last month,
causing some borrowers especially the small scale entrepreneurs
to defer servicing loans, banks said .
“The level of
non-performing loans is yet to mushroom to become a systemic
problem,” said Francis Mwangi and Martin Kirimi, researchers at
the investments bank, in a joint briefing on Thursday.
In August, the level
on non-performing loans, or loans that had not been serviced for
several months rose to 10.7 percent of the total loans given by
banks, which the Standard Investment Bank termed as a “10 year
But it noted that
the majority of the banks had not noted any increase and that
only a few banks were responsible for the amount of loans that
are not being repaid.
The two financial
researchers also said Kenyan banks have adequate capital meaning
that even if they were to write off or cancel all those loans,
it will not affect their financial stability.
loans are mainly being driven by business loans and not personal
or household credit. Within the business segment, building and
construction, trade and agriculture sectors have the highest
amount of these non-performing loans,” the researchers said.
all sectors have reported slow business, usually associated with
the electioneering period, various business leaders reported.
This is being seen as one of the causes of companies not being
able to repay their loans on time.
Kenya Private Sector
Alliance reported its members had lost 7 million U.S. dollars
related to slowdown during the election period.
“This loss is only
in the four months that the electioneering period was open,”
said the alliance’s Vice Chairperson Patrick Obath. Similar
views were expressed by the Chairman of the Kenya Chamber of
Commerce and Industry Kiprono Kittony.
“There is definitely
low circulation of money which has affected consumer purchasing
power and overall business performance,” he said.
Minister Henry Rotich said although drought and elections cut
growth by a massive one percent, the economy is expected to
register growth next year at 6 percent.
The ongoing rains
are expected to provide adequate food supplies into next year,
meaning a rebound of the agriculture sector and cutting on the
cost of food.