Kenya’s private-sector credit stock surged to an all-time high of KSh 3.96 trillion in September 2025, signalling a full recovery from the lending slowdown that gripped the economy through 2024.
According to the Central Bank of Kenya (CBK), credit to the private sector grew by 5.0% year-on-year—up from 3.3% in August and a contraction of -2.9% in January.
This marks the first sustained upswing in private credit growth since mid-2022, following a year of stagnation driven by high interest rates and tight liquidity. By mid-2024, credit stock had dipped to KSh 3.78 trillion before rebounding sharply as monetary easing took hold.
“The improvement reflects declining lending rates and stronger credit appetite as liquidity conditions eased,” the CBK noted. Average commercial bank lending rates fell to 15.1% in September, down from 17.2% in November 2024, following eight consecutive Central Bank Rate cuts, the longest easing streak in Kenya’s monetary history.
Sectoral Lending: Construction and Manufacturing Lead the Charge
Data from the CBK’s Monetary Policy Committee (MPC) shows a broad-based recovery in credit across key sectors:
- Building and construction loans soared 52.9%, driven by renewed project financing.
- Manufacturing credit rose 11.1%, reversing a year-long contraction.
- Consumer durables lending increased 12.2% as households responded to lower borrowing costs.
- Trade sector credit grew 3.9%, easing from a June peak of 12.0%.
The CBK attributed the rebound to “improved demand for working capital and investment loans as economic activity strengthens.” The MPC also reaffirmed its commitment to implementing the Risk-Based Credit Pricing model by March 2026, which it says will “enhance transparency in loan pricing and improve monetary policy transmission.”
Despite recent easing, credit remains costly, says NCBA Market Analysts. According to their Post-MPC Reaction, Kenya’s cost of credit remains restrictive, as reflected in a persistently high non-performing loan (NPL) ratio of 17.1% in September, only slightly down from 17.6% in June.
“Indicatively, commercial banks’ weighted average lending rates stood at 15.1% in September, down from 17.2% in November 2024, but still elevated by historical standards.”
Business Activity Rebounds, But Construction Lags
Kenya’s broader private-sector activity also showed signs of revival. The Stanbic Bank Kenya Purchasing Managers’ Index (PMI) rose to 51.9 in September, up from 49.4 in August, crossing the 50.0 threshold for the first time since April. A reading above 50.0 signals expansion in business activity.
“Business conditions expanded in September, implying the start of a recovery after the disruptions that followed protests in Q2:25,” said Christopher Legilisho, Economist at Stanbic Bank.
However, the construction sector remained a weak spot. “Some areas experienced weakness, especially in the construction industry where output fell sharply,” Stanbic noted.
Growth Outlook: Recovery Amid Structural Risks
Kenya’s economy grew 5.0% year-on-year in Q2 2025, up from 4.6% in the same period last year. The CBK has maintained a real GDP growth projection of 5.2% this year, while the 2026 growth is forecast marginally higher at 5.5% from 5.4% previously.
But the World Bank remains cautious, having revised its 2025 growth forecast down to 4.5% in May, citing high debt levels, elevated lending rates, and a prior decline in private-sector credit.
