The importation of goods made up over 60% of Kenya's bank credit facilities in the first half of 2024

Key takeaways:

  • Over 60% of Kenya’s bank loans for foreign trade were used to fund imports, limiting resources for exports.
  • In all six months, exports received less than 40% of the credit allocation, highlighting a significant gap.
  • Import credit peaked at 66.23% in June
  • The import-export credit ratio remained relatively stable, suggesting an ongoing structural trend in trade financing.
  • To balance trade, policies could focus on enhancing export production, incentives for exporters, and easing export credit access.

Kenya’s banking sector remains a crucial player in financing international trade, but the balance is heavily tilted towards imports. In the first half of 2024, over 60% of total bank credit allocated to foreign trade went to importing goods, leaving less than 40% for exports. This trend signals a deep reliance on foreign products, raising questions about trade imbalances and the need for export growth.

This pattern is consistent month after month, with March, May, and June peaking above 66% in import financing. Kenyan businesses benefit from import credit, but to ensure long-term economic stability, banks and policymakers might need to explore strategies that promote export financing. A shift towards a more balanced trade credit distribution could strengthen local industries, create jobs, and improve economic resilience.

Source:

Central Bank of Kenya

Period:

2024
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