The Central Bank of Kenya (CBK) has lowered the Central Bank Rate (CBR) to 11.25% as of December 2024, down from 12.50% in December 2023, as part of broader monetary policy measures aimed at stimulating economic activity.
Despite the easing of the CBR, commercial bank lending rates increased over the same period, with the average interest rate rising to 16.89%, reflecting tightening credit conditions in the banking sector.
At the same time, the 91-day Treasury bill interest rate dropped significantly to 10.32% in December 2024 from 15.70% the previous year.
The CBK’s inter-bank rate also recorded a slight decline, easing from 11.65% to 11.45%, indicating a more accommodative interbank lending environment.
In terms of liquidity and money supply, Broad Money (M3) expanded marginally by 1.0% to reach Sh 6.1 trillion by the end of 2024.
Money Supply (M2) grew by 7.8%, from Sh 4.5 trillion in 2023 to Sh 4.8 trillion in 2024. Growth was also observed in Quasi Money and M1, which rose by 11.1% and 3.7%, respectively.
Credit Trends
Credit to the National Government rose sharply, growing by 13.9% to Sh 1.96 trillion, up from Sh 1.72 trillion in December 2023.
In contrast, private sector credit shrunk slightly, decreasing by 1.1% to Sh 4.03 trillion by the end of 2024.
The microfinance sector saw a significant contraction, with total domestic credit extended by microfinance banks dropping by 13.6% to Sh 42.7 billion.
Credit to the private sector by microfinance institutions plummeted by 15.8%, while loans to the National Government increased marginally by 2.4% to Sh 4.5 billion.
Deposit-taking SACCOs (DT-SACCOs) recorded positive growth, with credit to the private sector and National Government rising by 13.4% and 14.1%, reaching Sh 747.0 billion and Sh 16.2 billion, respectively.
The Nairobi Securities Exchange (NSE) posted strong performance during the review period, with market capitalization surging by 34.8% to Sh 1.94 trillion, up from Sh 1.44 trillion in 2023.
The life insurance sector also witnessed solid growth, with gross premium income increasing by 18.5% to Sh 201.6 billion. Long-term insurance investments rose by 23.4%, reaching Sh 859.3 billion.
Meanwhile, assets under pension fund management grew by 20.3%, standing at Sh 2.21 trillion as of December 2024.
The Unclaimed Financial Assets Authority (UFAA) reported that the total value of unclaimed assets received in 2024 amounted to Sh 4.27 billion, slightly up from Sh 4.22 billion in 2023.
The monetary and financial data from 2024 reflect a cautiously optimistic economic trajectory, with policy adjustments and sector-specific growth indicators shaping Kenya’s financial outlook heading into 2025.
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