This archive report was first published on 9 June 2020.
Published on June 9, 2020, Kenyan banks are bracing for a tougher future amidst the economic slump caused by the Covid-19 pandemic.
With Non-Performing loans growing to 13.1 per cent, lenders have requested the Central Bank of Kenya (CBK) to create a fund to help them lend to sectors adversely affected by the pandemic.
Stanbic Kenya Chief Executive Officer Charles Mudiwa said the fund will offer protection as they lend to risky sectors, adding that Covid-19 has become endemic and will be normalised in their day-to-day life.
CBK Governor Patrick Njoroge, however, said liquidity levels in the financial sector remain robust, with most commercial banks expected to have enough capital reserves to weather the storm.
Mr Mudiwa noted that while CBK's policy interventions have helped, the economic uncertainty around Covid-19 is expected to last longer than earlier anticipated, requiring a more sustained intervention to safeguard SMEs.
He added that two-thirds of SMEs might not re-open their doors post-Covid-19, necessitating a guarantee fund for loans to enable banks to lend more and grow.
