Both the cost of loans and the cost of living went up in 2023 compared to 2022, according to the 2024 Economic Survey Report that Treasury CS Njuguna Ndung’u released on Monday.
The Central Bank Rate (CBR), which banks use as a benchmark in the pricing of commercial loans, rose to a high of 12.50 per cent in December 2023, a sharp increase from the 8.75 per cent in December 2022. This had the ripple effect of increasing the cost of borrowing, with the interest rates for loans and advances rising to a high of 14.63 per cent in December 2023, up from 12.67 per cent as at December 2022.
Despite the rise in the cost of loans, banks and non-bank financial institutions — which includes Saccos and micro-finance institutions — recorded an increase in the amount of money that their customers borrowed. This grew by 16.5 per cent during the year under review to stand at Sh2.862 trillion.
Within the same period, the supply of money in the economy grew by a significant margin — 19.9 per cent — to stand at Sh6.044 trillion by December last year. Net foreign assets also increased to Sh792.4 billion over the same time.
Despite the changes in the money market, inflation remained relatively stable at 7.7 per cent in 2023, just as had been the case in 2022, largely driven by high costs of energy.
Incidentally, the volume of petroleum products imported into Kenya declined drastically — by a staggering 27.6 per cent — during the year under review, meaning that oil marketers imported 4.3 million tonnes of petroleum products during that period.
Similarly, the installed electricity generating capacity decreased from 3,321.3 megawatts (MW) in 2022, to 3,243 MW last year.
“Total electricity demand increased from 12,985.4GWh in 2022 to 13,423.6GWh last year,” says the report in part.
On the upside, the bulk of electricity generated locally was from renewable sources, mostly geothermal. Although the proportion power from renewable sources to total electricity reduced from 85.4 per cent in 2022 to 83.4 per cent last year, this still places Kenya among outliers in the production of electricity from renewable sources.
Data from the Kenya Electricity Generating Company (KenGen) has in the past placed Kenya among the top five in Africa and top ten globally in terms of capacity to generate power from renewable sources.
