A majority of private sector CEOs in Kenya are projecting increased economic output this year, pointing to better prospects for jobseekers, entrepreneurs and employees.
A new Central Bank of Kenya (CBK) survey, which interviewed 249 chief executives of banks and non-bank firms, said they foresee improved production and demand for goods and services over last year’s level.
CBK, the financial services regulator, conducts a market perception survey every two months that forms the basis for the decision taken by the Monetary Policy Committee to either increase, retain or lower interest rates through the benchmark Central Bank Rate, which has been steady at nine per cent since last July.
The regulator has linked the private sector optimism to a stable macroeconomic environment, largely shaped by interest rates, exchange rates and inflation, as well as low oil prices, rebound in tourism, strong remittance inflows and government-led infrastructure development projects.
“Respondents said employment was expected to increase in the next two months driven by optimism in the business prospects for 2019 and expected growth,” the report states.
About 77.8 per cent of the large banks surveyed expected demand for credit to be moderate to high despite the legal ceilings on loan charges, with those expecting high growth doubling to 22.2 per cent compared with the previous survey conducted in November.
The bank chiefs say the demand is being driven by lower interest rates (at a maximum of 13 per cent), consumer loans growth in the first two months of the year to fund education-related needs and expected demand for loans by farmers in February ahead of the long-rains planting season usually in March to April.
They also cite optimism among micro, small and medium enterprises in investment opportunities under the government’s Big Four economic transformation plan, which focuses on manufacturing, universal healthcare, food security and affordable housing.
“However, respondents said that lower loan approval rates by banks had slightly dampened the demand for credit with some clients resorting to mobile loans,” CBK said.