I think post-rate capping (2016) credit to the private sector & individual has continued to grow - but a more subdued growth (single digit as opposed to double digit). Everyone has benefited from the low-interest regime. Gov and private sector are all enjoying lower interest...and in fact CBK has gone out of their way to keep the CBR rate higher - otherwise, Rotich would be borrowing at say 6%. Therefore Njomo low-interest regime is not all that bad...and I am glad we tried it. The gap of risky lending has been covered by the digital lenders..You keep questioning the economic growth rate (doubling of the economy) in six years of Jubilee without any strong basis. The growth has been broad-based. It also real growth of the economy - check the money supply (there is lot more more money (m1,m2,m3) under Jubilee than previously. Check poverty data.
This propaganda about real economy not growing as no basis. Some few sectors are struggling - like real estate - but everyone else is doing great.
Check out CBK numbers on local borrowing. Jubilee has increased both local and expensive commercial loans not to mention the euro and chinese loans. We have had this discussion before, not all gdp growth are equal. btw njomo capping rates is what has enabled government to borrow cheaply locally at the expense of private sector. If it wasn't for cap rates the government would be borrowing at 18% to 20% which would have forced treasury to halt crazy borrowing. The chinese loans are even worse cause they have be repaid using $, that's money being sucked out of the economy for projects that aren't yielding enough to pay for themselves. Anyway jubilee can claim of growing the economy at whatever rate but the kawaida mwanachi isn't feeling it.
Credit growth has averaged below 5% since the capping of interest rates. For the private sector growth to grow significantly credit growth should be above 12%. Only government has benefited from capping of rates and banks. Banks are now making more money from buying tbills than lending to private sector. There's no way CBR will be lowered to 6% cause that would mean the treasury would need to address all other macroeconomic factors.
How can all sectors be thriving except real estate yet non performing loans have increased across the board
http://kippra.or.ke/interest-rate-cap-two-years-on-outcomes-for-the-kenyan-economy/ ?
There's no point in having low interest rate that only the blue chip companies can access. Its better to have rates at 18% that's accessible to majority of kenyans. The key to kenya economy as pointed out by Robina is SME and MSME. Even in retail we're retrogressing, kenya used to be 40% formalized now we're in 33% range. And we have seen clearly the advent of kadogo economy. Yet, the overall volume sales aren't increasing , meaning consumers are downgrading to small packets. That's not a sign of a thriving economy.
