Nairobi — President William Ruto has urged local banks to lower interest rates in order to stimulate economic growth by providing affordable loans to micro, small, and medium-scale traders.
He noted that after the Central Bank of Kenya (CBK) further lowered the Central Bank Rate to 12 per cent early this month from 12.75 per cent in August, commercial banks ought to commensurately reduce their interest rates too, which currently stand as high as 20 per cent.
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Addressing the Micro, Small, and Medium-sized Enterprises Exhibition sponsored by the Kenya Bankers Association (KBA) at the Kenyatta International Conference Centre on Wednesday, the President also called on the banking sector to extend credit facilities to the manufacturing sector.
"Lending to the manufacturing sector is not doing well and is weighing down our economy," he said.
He noted that Kenya continues to import goods it can manufacture on its own, thus stifling job creation and draining much needed foreign exchange.
Kenya's MSME sector employs between 80-90 per cent of people in the country, contributing to a third of the Gross Domestic Product, hence the need to protect and support the sector, emphasised the Head of State.
Prime Cabinet Secretary and Cabinet Secretary for Foreign and Diaspora Affairs Musalia Mudavadi was in attendance.
The President exuded confidence about Kenya's economic fundamentals, as evidenced by the increased foreign investors trooping into the country in search of business opportunities.
This has been achieved after inflation fell to the current 3.6 per cent from a high of 9.5 in 2022, and with the shilling stabilising at around KSh129 when retailing against the major currencies, from a high of KSh165 in the same period.
"We need to believe in ourselves more than we do. How come outsiders are seeing opportunities here in Kenya, and we are not?" he said.
He said that contracts worth KSh5 billlion have been set aside for MSME traders to provide products, such as doors and windows, for houses being built under the Affordable Housing Program, and urged the local banks to support the traders as well with affordable loans.
Moreover, he pointed out that the National Government is constructing 400 new fresh produce markets across the country to imporove the business environments of MSMEs
Further, he called on Kenyan banks to take advantage of the Pan African Payment and Settlement System to conduct transboundary trade.
The payment system, which Kenya is a member of, allows traders to buy goods and services in local currencies, thus saving them from foreign exchange losses.
During the function, KBA released its Accelerant Program for MSMEs and announced that it would provide KSh150 billlion annually in loans to the sector over the next three years.
President Ruto congratulated KBA for being one of the biggest taxpayers in the country, contributing KSh190 billion to the exchequer in 2023.
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He said the government is not contemplating burdening Kenyans with more taxes but will extend the tax bracket to bring in more Kenyans to pay taxes, however little it might be.
Others present at the function were Central Bank Governor Kamau Thugge, Treasury Cabinet Secretary John Mbadi, and KBA chairman John Gachora.
CS Mbadi said the government is urgently working on unlocking the liquidity issue in the economy by seeking ways of settling pending bills.
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