The Coronavirus (COVID-19) pandemic has had a positive impact on Kenya’s banking sector even as demand for credit shrinks since the outbreak of the disease in the country in March 2020, a survey revealed
The pandemic, according to the banks, has accelerated the use of digital platforms, in particular, mobile and internet banking.
The 39 Kenyan bank officials in a survey conducted by the central bank for the quarter ending December 2020 on Thursday in Nairobi reported.
“It has also led to increased demand for lending to Fast-Moving Consumer Goods (FMCG), health and technology sectors,” said the survey.
Kenyans transacted 5.21 trillion shillings (about 47 billion dollars) in 2020 on their mobile phones, with a good amount of the money moved from bank accounts to cell phones and vice versa after banks and telecoms waived charges.
Among the FMCG sectors where demand for credit rose during the period are agriculture and manufacturing.
The bankers further observed that the classification of financial services as essential services during the pandemic helped boost the sector.
But a major negative impact of the pandemic on the financial services sector, besides the decline in demand for credit, is a rise in non-performing loans (NPL), according to the survey.
However, as economic activities pick up, a majority of the bankers expect the NPLs to fall in the first quarter of 2021.
“For the quarter ending March 31, banks expect to intensify their credit recovery efforts in all economic sectors to enhance reduction of NPLs,” said the survey. (Xinhua/NAN)