What happened

On 18 September 2026, President William Ruto used the Central Bank of Kenya’s (CBK) 60‑year milestone as a platform to publicly ask the banking sector to make credit cheaper for Kenyan businesses and consumers. Speaking at a ceremony marking the CBK’s six‑decade history, the president warned that the current cost of borrowing is dampening investment, limiting job creation and slowing the country’s economic recovery after recent global shocks.

Context and background

The Central Bank of Kenya, established in 1966, has overseen the nation’s monetary policy for six decades, guiding inflation, exchange rates and the stability of the financial system. Over the years, the CBK has introduced reforms such as the introduction of the Kenya Shilling, the adoption of mobile money regulations, and the recent push for digital payments. Ruto’s call comes at a time when the CBK is reviewing its monetary stance after a period of high inflation that peaked at double‑digit levels in 2022 and 2023.

Kenyan banks have traditionally set lending rates based on the Central Bank’s base rate, which has hovered between 7% and 9% since 2020. Adding risk premiums, processing fees and other charges, the average commercial loan rate for small and medium enterprises (SMEs) has often been in the 12%‑15% range. The high cost of credit has been a recurring concern for the private sector, especially for SMEs that rely on bank loans for working capital, inventory purchase and expansion. The president’s remarks echo earlier statements from the Ministry of Finance, which have urged the banking sector to consider “more flexible terms” to support growth.

Political leaders in Kenya have periodically intervened in credit policy, but Ruto’s appeal is notable because it coincides with the CBK’s anniversary celebrations, a symbolic moment that draws media attention. The president also referenced the role of financial technology firms, noting that fintech platforms have introduced alternative financing options that can be more affordable if properly regulated. By linking the call to the CBK’s legacy, Ruto is signaling that the central bank’s mandate includes fostering an environment where credit is both accessible and reasonably priced.

Compared with what is normal

Historically, Kenya’s lending rates have fluctuated with macro‑economic conditions. During the early 2000s, average commercial loan rates were above 18%, reflecting higher risk premiums and limited competition. The post‑2008 global financial crisis era saw a gradual decline, reaching a low of around 10%‑11% in 2015 when the CBK’s base rate was reduced to stimulate growth. The current average of 12%‑15% for SME loans is therefore higher than the 2015 low but lower than the early‑2000s peak.

• Base rate: 7%‑9% (2020‑2026) vs. 5%‑6% in 2015.
• SME loan rates: 12%‑15% now vs. 10%‑11% in 2015.
• Inflation: double‑digit peaks in 2022‑2023 vs. sub‑5% in 2015.

Why it matters

For Kenyan SMEs, the cost of borrowing directly affects profit margins and the ability to expand. A loan at 15% interest costs Sh15,000 per Sh100,000 borrowed each year, which can be a decisive factor when deciding whether to invest in new equipment or hire staff. Higher credit costs also push some businesses toward informal lenders who charge substantially higher rates, increasing financial vulnerability.

Households seeking personal loans for education, health or home improvement face similar pressures. Expensive credit can delay critical expenditures, reduce consumer spending and consequently slow down sectors such as construction, retail and services. Moreover, when businesses struggle to finance operations, tax revenues may decline, limiting government capacity to fund public services.

The banking sector, meanwhile, risks losing market share to fintech firms that offer quicker, lower‑cost loans through digital platforms. If banks do not adjust their pricing, they may see a migration of credit‑seeking customers to alternative lenders, potentially impacting their asset quality and profitability.

Practical steps

• Review existing loan agreements: Compare interest rates, fees and repayment terms with current market offerings to identify possible savings.
• Explore alternative financing: Consider reputable fintech platforms, government‑backed loan schemes or supplier credit that may offer lower rates.
• Engage with your bank: Request a meeting to discuss restructuring options, such as extending loan tenors or negotiating lower margins.
• Strengthen creditworthiness: Improve your business’s financial statements, maintain a healthy cash flow and keep a solid credit history to qualify for better terms.
• Monitor policy updates: Stay informed about any CBK announcements or regulatory changes that could affect lending rates or credit availability.

Financial Management & Analysis at Beavoren Ventures can help SMEs and individuals assess the true cost of their credit, model cash‑flow impacts of different financing options, and prepare robust financial reports that improve bargaining power with lenders.

Book a consultation with Beavoren Ventures today and let us handle your compliance, books, and advisory in one place.

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.