NAIROBI, Kenya, June 17 – Commercial banks expect lending to the private sector to increase in 2026 from 2025, supported by lower interest rates, improving economic conditions, and a gradual recovery across key sectors, according to the Central Bank of Kenya (CBK) Market Perceptions Survey for May 2026.
About 52 percent of respondents attribute the anticipated credit growth to monetary policy easing, which has lowered lending rates and reduced the cost of capital for borrowers.
This has stimulated demand across households and businesses, particularly in MSMEs, manufacturing, construction, trade and agriculture.
Banks also point to targeted SME financing strategies and the rapid uptake of digital lending channels as additional drivers expected to deepen credit penetration and improve access to financing across the economy.
However, lenders remain cautious in their outlook, citing persistent risks including geopolitical tensions, weak household purchasing power, elevated production and energy costs, and lingering asset quality concerns that continue to shape risk-averse lending behavior.
On credit demand, banks expect moderate to strong uptake in June and July 2026, driven by cheaper borrowing costs, increased competition among lenders, and rising working capital needs as businesses respond to higher input, logistics and fuel costs.
Still, the survey notes that elevated inflationary pressures, tight underwriting standards and global uncertainties particularly oil price volatility and Middle East tensions could slow investment decisions and temper the pace of credit expansion.
“Lower lending rates following monetary policy easing have significantly improved borrowing affordability and stimulated demand across key sectors of the economy.”
“While demand for credit is improving, banks remain cautious due to persistent macroeconomic uncertainties, high input costs and rising credit risk concerns.”
The findings are based on the CBK’s Market Perceptions Survey, which draws insights from commercial banks, microfinance institutions and non-bank private sector firms across major economic hubs including Nairobi, Mombasa, Kisumu, Eldoret and Nakuru.
