Banks have almost doubled loans issued to the mining sector that grew by 97.7 percent, the fastest rate in the year to February.
Although mining makes up the smallest portion of Kenyan bank loans, the value lent out has increased from Kes12.3 billion in February last year to Kes24.3 billion according to Central Bank of Kenya (CBK) data.
Mining offers great potential to lenders especially given the push by the World Bank who are urging African states to drop conditions on having local shareholders that has dampened foreign interest.
The World Bank wants countries like Kenya to drop the requirement for mining firms in Kenya to cede at least 35 per-cent stake to locals to attract more investments.
Banks expanded private sector credit by up to 11.7 percent in February with most sectors seeing a double digit loan growth of about 20 percent.
Loans to finance and insurance sector grew 21.1 percent to February to Kes136.3 billion underscoring the fact that this was one of the fastest sector that grew in the economy last year. Kenya’s economy was lifted by accommodation and food services that grew 26.2 percent on recovery of the tourism sector and the financial sector which recorded a 12.8 percent sector growth.
Although the country witnessed a decline in agricultural output last year, the sector had one of the fastest loan growth at 18 percent to Kes113.5 billion coming from a low base of Kes96.1 billion in February last year.
Real estate remains the sector with the least allocations of loans growing 2.9 percent to Kes422.3 billion while building and construction sector grew only3 percent to Kes135.4 billion.
Banks have also increased loans issued to the manufacturing sector which 15.2 percent to Kes531.8 billion up from a 7 percent growth in a similar period last year.
Since February last year, banks have increased loans to the private sector by double digits up to February as the regulator started allowing lenders to price loans according to risk.
Banks have given out Kes3.4 trillion to local businesses despite high rates of non-performing loans that stood at 14.0 percent in February 2023, compared to 13.3 percent in December 2022.
However increase in the Central Bank Rate to 9.5 percent in March is likely to impact the rate of loan growth signaling a reduction of loan demand on higher costs, calls for restructuring facilities and higher rates of defaults.