The 2016 interest rate cap on lending has significantly curtailed credit expansion to Kenya's private sector, according to a Citi research report. This policy shift coincided with a sharp decline in enterprise credit growth, which fell from 15% to 2.5%.
Digital financial innovations have partially offset these constraints. Platforms like M-Shwari, KCB-Mpesa, and Safaricom's Fuliza overdraft facility demonstrate alternative lending models. Fintech solutions such as Tala and Branch also emerged to meet demand, though traditional banks remain the primary credit providers.
Citi analysts highlighted the Kenyan shilling's 2019 forecast of 108.9 against the US dollar, citing overvaluation as a structural challenge. Despite this, the report notes Kenya's economic resilience, stating, "Our overall takeaway on Kenya is that despite a few uncertainties... the backdrop looks robust and supportive of growth."
The study also emphasizes Kenya's equity market as one of the top-performing frontier markets globally. Non-technological lenders like ASA International continue to support small business financing, complementing digital credit initiatives.
