Banks urged to focus on impact of MSME lending

Nairobi, Kenya – Central Bank of Kenya Governor Kamau Thugge has urged banks to shift their focus away from merely the volume of credit they lend and instead concentrate on the impact of financing on businesses, jobs, and livelihoods, with particular emphasis on Micro, Small, and Medium Enterprises (MSMEs). Thugge emphasized that lenders should create financing solutions that cater to the actual needs of businesses and promote sustainable economic activity.

Private sector credit growth surged to 10.4 percent in August 2026, while the average commercial bank lending rates decreased to 14.3 percent. The Kenya Bankers Association (KBA) Vice Chairperson and Credit Bank Chief Executive Officer, Betty Korir, revealed that banks had extended Sh246 billion in new loans to MSMEs by mid-2026.

Korir set a target for the banking industry to provide at least Sh500 billion in new MSME lending by the end of the year. She advocated for better data, smarter guarantees, and partnerships to enhance access to finance. Additionally, Korir highlighted the importance of climate resilience and green financing, especially in agriculture.

KBA Chief Executive Officer, Raimond Molenje, stressed that banks should measure lending based on the wealth, jobs, and livelihoods created rather than solely on the volume of credit provided. Molenje urged the banks to approach the agriculture sector differently to have a significant impact and improve livelihoods. These recommendations were presented during the 15th Annual Banking Research Conference organized by the KBA, which focused on "Banking Amidst Macroeconomic Policy Reforms: Emerging Risks and Opportunities."