By CHARLES MWANIKIMore by this AuthorThe outlook for the private sector credit remains downcast this year due to rising non-performing loans and banks’ preference for government debt to minimise risk. At the same time, credit to the private sector grew at just 2.4 per cent in the year to December 2017, against an average growth of 9.4 per cent in 2016. “We are of the view that the outlook for a strong credit growth remains relatively gloomy, given the rise in non-performing loans and the crowding-out effect supported by the credit to government growth numbers for 2017,” says Kingdom. The two investment banks say although a review of the rate cap law could kick-start lending to private sector, banks will also have to contend with new accounting rules (IFRS 9) which make it costly to lend to riskier customers. “We hold the view that barring a repeal or review of the current interest rate controls, growth in private sector credit will remain sticky,” said Genghis in its 2018 macroeconomic outlook.

Source: Daily Nation February 12, 2018 18:56 UTC