The Central Bank of Kenya has responded to cries from Kenyans who have been demanding Covid-19 relief measures after President Uhuru Kenyatta’s new public order directive.
Speaking during a press conference on Tuesday, March 30, CBK Governor Patrick Njoroge said that measures such as waivers and loan restructuring would only be implemented if the situation warrants.
“If things turn out that additional measures are needed because the situation has worsened, then the Monetary Policy Committee and other authorities and policy makers stand ready to deal with that,” he said.
CBK Governor Patrick Njoroge speaking during a press conference on March 30, 2021
He added that CBK already had measures in its ‘back pocket’ that it would unleash if the economic situation got worse.
Governor Njoroge also noted that the economic activity in the rest of the country was not affected as much and that activities in the zoned area (Nairobi, Kiambu, Machakos, Kajiado and Nakuru) were still ongoing.
He reported that Kenya’s economy had recovered in the fourth quarter of 2020 and first quarter of 2021.
In terms of restructuring of loans, the CBK noted that the institution had to balance the cost of such measures since the money loaned out by banks belonged to other Kenyans.
“If from your perspective you are only looking at it as a borrower, for every borrower there is a lender and a depositor. Those funds belong to somebody else as a depositor so it is important to safeguard that,” Njoroge explained.
“We don’t want to introduce bad behaviour because it is very difficult to break away from it. The idea of being regular with your payments is important for all of us,” he added.
The CBK also maintained the key interest rate at 7% despite a highly uncertain economic outlook.
The rate directly affects commercial banks’ borrowing costs and eventually trickles down to individual borrowers and businesses.
CBK cut the benchmark rate to 7% from 7.25% in April 2020, at the onset of the covid19 pandemic, and has retained the rate ever since.
Central Bank of Kenya (CBK) building in Nairobi.