This archive report was first published on 7 August 2020.
As the country slowly recovers from the economic impact of the COVID-19 pandemic, Kenyan banks are facing an uncertain future. According to a recent survey by the Central Bank of Kenya, 11% of Tier 1 lenders expressed reduced optimism and revealed plans to fire staff in the coming months.
Published on August 7, 2020, the survey report highlights the challenges faced by the banking sector in the wake of the pandemic. The report notes that the increased uptake of digital activities has led to reduced business projects, forcing banks to reassess their workforce.
However, not all banks are planning to lay off staff. Microfinance lenders and medium enterprises are likely to maintain the status quo, citing the lifted travel restrictions and the stimulus package offered to local firms as reasons for optimism.
Despite the challenges, private sector credit growth is expected to increase this month and remain so for the remainder of the year, driven by increased demand from businesses and increased liquidity in the banking system.
However, some respondents indicated that the demand for credit may remain moderate due to uncertainties surrounding the rising COVID-19 cases and credit risk.
According to the Central Bank's July data, credit to the private sector grew by 7.61% in the year to June, reaching Sh2.69 trillion.
