What happened

President William Ruto used the Central Bank of Kenya’s 60th anniversary celebrations to publicly ask commercial banks to reduce the cost of credit for borrowers. In a televised address on 18 September 2026, he highlighted that high lending rates are stifling growth for small and medium enterprises (SMEs) and ordinary Kenyans who need affordable financing. The president’s appeal coincided with the launch of new digital initiatives under the KBC Digital umbrella, aimed at improving transparency and competition in the banking sector. While no specific rate cut was mandated, the call signals a political priority for cheaper financing as Kenya marks six decades of central banking.

Context and background

The Central Bank of Kenya (CBK) was established in 1966 and has overseen the nation’s monetary policy, financial stability and banking regulation for six decades. Over the years, the CBK has introduced several reforms to deepen financial inclusion, ranging from mobile money regulations to the recent KBC Digital platform that aggregates loan offers from multiple lenders in a single digital marketplace. KBC Digital, launched earlier this year, is intended to give borrowers clearer visibility of interest rates, fees and repayment terms, thereby fostering competition among banks.

Kenya’s banking sector is dominated by a handful of large commercial banks, which together account for roughly 80 % of total loan assets. Historically, average lending rates for corporate and consumer loans have hovered in the high‑teens, typically between 15 % and 20 % per annum, depending on risk profile and loan size. In the wake of the COVID‑19 pandemic and subsequent inflationary pressures, many banks raised rates to protect margins, leaving many SMEs facing cost‑of‑credit burdens that exceed their cash‑flow capacity. Ruto’s remarks echo previous government statements, such as the 2022 budget speech that urged the CBK to encourage “more affordable financing for the private sector.”

Compared with what is normal

When the president calls for lower credit costs, it is useful to benchmark against recent trends and historical averages. In the past three years, the average prime lending rate in Kenya moved from about 12 % in 2020 to roughly 13‑14 % in 2023, before climbing to the high‑teens in 2024 and 2025 as inflation hit double‑digit levels. By contrast, regional peers such as Tanzania and Uganda have maintained average lending rates closer to 12‑13 % during the same period, partly due to more aggressive monetary easing and lower inflation volatility. The current Kenyan environment therefore sits above the regional norm, reinforcing the president’s concern.

• Average Kenyan lending rate (2025): 17‑19 % – higher than the East African Community average of 13‑15 %.
• SME loan approval rate: roughly 45 % of applications, indicating tighter credit standards.
• Inflation rate (June 2026): 7.2 % YoY, still above the CBK’s 5 % target, pressuring banks to keep margins.
• KBC Digital listings (as of September 2026): over 2,000 loan products, showing growing digital competition.

Why it matters

For Kenyan SMEs, the cost of borrowing directly affects the ability to invest in inventory, equipment and staff. A 2‑percentage‑point reduction in loan interest could translate into savings of thousands of shillings on a Sh1 million loan, freeing cash for expansion or debt repayment. Households seeking personal loans for education, health or home improvement also stand to benefit, as lower rates reduce monthly instalments and the risk of default. Moreover, cheaper credit can stimulate broader economic activity by encouraging consumption and investment, which in turn supports job creation – a priority for the Ruto administration as unemployment remains above 7 %.

Practical steps

• Review existing loan agreements and compare the effective interest rate with offers listed on KBC Digital; negotiate a lower rate if market alternatives are cheaper.
• Consider refinancing through a bank that participates actively in KBC Digital, as digital platforms often provide promotional rate cuts for early adopters.
• Strengthen your credit profile – maintain timely payments, reduce existing debt ratios and keep financial statements up‑to‑date – to qualify for the best rates when banks adjust pricing.
• Engage with your bank’s relationship manager before the next rate review cycle (usually quarterly) to discuss potential concessions tied to the president’s call.

Beavoren Ventures’ Financial Management & Analysis service can help SMEs model the impact of different loan rates, prepare robust credit proposals and navigate the KBC Digital marketplace with confidence.

Talk to our team at Beavoren Ventures - info@beavorenventures.co.ke - to set up your systems correctly.

Disclaimer: This article is informational and does not constitute formal tax, audit or legal advice. For guidance specific to your circumstances, please contact Beavoren Ventures.