Kenya’s economy is still on track to grow by 6% this year according to Central Bank of Kenya Governor, Dr. Patrick Njoroge, even as the private sector dwindled.
“The Economy is doing relatively well… this is the time for investors to actually place a long-term bet on the economy.” Said Dr. Njoroge talking to Reuters.
The new law to cap interest rates has however dislodged the economy as bank shares dropped which according to analysts would limit loans to small borrowers who drive growth and create jobs.
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Over the decision to cap interest rates by the Government, the effect to commercial lenders would cause unpredictability in their decisions while the Monetary Policy Committee faced a hard task in determining how rates would affect the general economy.
Small banks are widely expected to merge or close shop in reaction to the new rates due as the lenders are forced to look for more avenues of generating revenue. Technology to enhance cost containment initiatives like mobile applications and internet banking is the leading growth driver in the sector according to Cytonn Q1’2016 Banking Sector Report.
“The landscape is changing. If you want to be the bank in the new landscape, you better change now.” Dr. Njoroge told Reuters while urging banks to boost financial transparency to ensure strong oversight and build a strong sector which will drive Kenya’s aim to become an international finance center.
By: Humphrey Ngugi