Banks in Kenya Have Restructured Sh1.12 Trillion worth of Loans due to COVID-19 Pandemic

About Sh1.12 trillion worth of loans (or 38% of Kenya’s total loan book as of August 2020) have been restructured by Kenyan banks. Business Elites Africa understands that this was as a result of the economic fallout of the COVID-19 pandemic which has made it difficult for many borrowers to repay their loans.

According to Business Daily Africa, personal and household loans dominated the list of restructured loans. Apparently, many Kenyan workers who had earlier borrowed money from banks, are now struggling to pay back having either lost their jobs or suffered pay cuts.

It should be noted that as much as 1.72 million Kenyan workers lost their jobs between March and June this year. This followed Kenya’s imposition of lockdown measures in a desperate effort to curtail the spread of the deadly Coronavirus. Much like it was the case across Africa and elsewhere, the lockdown measures in Kenya ground the economy to a halt, causing job losses and pay cuts.

Also note that between March and August, Kenyan banks reviewed/restructured Sh 849.9 billion worth of business loans, according to the Central Bank of Kenya. Companies operating in sectors such as real estate, transportation, manufacturing, and even communication topped the list of those who submitted applications for loan review.

On Tuesday September 29th, while commenting on the loan restructuring during the Central Bank of Kenya’s Monetary Policy Committee (MPC) meeting, the apex bank’s Governor, Patrick Ngoroje, said that “these measures have continued to provide the intended relief to borrowers.”

Ngoroje also expressed optimism that the Kenyan economy will soon recover from the impacts of the pandemic, noting that “this improvement and resilience is supported by agricultural production, increased activity in key sectors particularly services with the easing of Covid-19 restrictions, normalisation of exports, and government interventions to mitigate the impact of the pandemic.”