This archive report was first published on 7 December 2019.
Published on December 7, 2019, data from the Central Bank of Kenya (CBK) reveals that corporates and wealthy individuals are sitting on a cash pile worth Sh1.41 trillion in a soft economy.
Long-term and fixed deposits associated with the wealthy, money market funds, and cash-rich corporates rose from Sh1.11 trillion in October 2017, reflecting a growth of 27 percent.
Foreign currency deposits also rose from Sh553.2 billion to Sh625.3 billion in the period under review, indicating that the wealthy are protecting their value and hedging against the local currency.
Analysts say high-net worth investors and companies with billions of shillings in fixed accounts have opted not to invest in expanding their businesses or starting new ventures, citing lower sales and returns.
Business owners have accused national and county governments of delaying payments to suppliers worth more than Sh150 billion, hurting businesses that trade with the government.
However, the government has started to clear pending arrears owed to the private sector in order to alleviate these cash flow constraints.
Kenya also removed a cap on commercial interest rates in November, which had been in place since 2016, and was blamed for stifling private sector lending growth and reducing the effectiveness of monetary policy.
