Kenyan borrowers 'still suffering' from high lending rates

Aug 16, 2010

High bank lending rates in Kenya are continuing to limit access to credit for the country's private sector.

The Daily Nation reports that although the stability of money markets in the nation is improving, the cost of lending remains prohibitive in spite of low inflation and high levels of available cash in the banking sector. According to the source, average consumers and private companies are being charged rates of up to 15 per cent for borrowing from financial institutions, despite banks providing cheap loans to both each other and the government.

The issue was the focus of a forum at the Kenya School of Monetary Studies held last week, which was attended by bank executives, private sector representatives and the Monetary Policy Committee of the Central Bank of Kenya. Defending the position of banks, James Mwangi of Equity Bank explained high energy and transport costs are being reflected in the price of credit.

Business Daily recently reported some consumers in Kenya may miss out on cheaper credit, as it is illegal for lenders to share information about customers with good credit records, even though the practice is permitted for consumers who have weak histories.