BREAKING: KENYA INSTITUTIONS HAVE BEEN WARNED

BREAKING: KENYA INSTITUTIONS HAVE BEEN WARNED
The report said that though other factors that

commonly affect debt such as high interest rates

may also play a role, numerous studies have

credited episodes of unusually high credit

growth with poor economic performance.

The International Monetary Fund (IMF) has

warned local financial institutions against over-

lending, saying it will gravely affect the

economy.

“Most Sub-Saharan African countries have

experienced a decade long rapid increase in

private credit. Real credit to the private sector

grew five fold over the period 2003-2014-an

average annual progression of 16 per cent over

10 years, leading to a doubling of the credit-to-

GDP ratio for the region as a whole.”

The report, officially titled Regional Economic

Outlook for Sub-Saharan Africa, has found that

lending by financial institutions across the

board has risen considerably over the last 12

years, attributing it to increased household

incomes.

“The ensuing increased financial deepening and

inclusion are certainly welcomed, but

authorities should be mindful of the increased

financial risks associated with excessive credit

growth,” the report said.

Moreover, banking penetration has increased

by roughly 50 per cent over the last 12 years

and is cited as an indicator of a banking crisis

in the long run.

Meanwhile, several countries in sub-Sahara

Africa have been flagged as having wild lending

practices hence requiring intervention.

They include Chad, Comoros, Republic of Congo,

Guinea, Guinea Bissau, Mozambique, South

Sudan and Togo — whose credit to the general

population was found to have grown over the

last decade by as much as 20 per cent relative to

the GDP.

Past Credit Booms

Angola

Central African Republic

Democratic Republic of Congo

Gabon

Ghana

Lesotho

Liberia

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