Over half of all banks in Kenya have raised their interest on loans. Most banks are now averaging 15 to 16 per cent.

The lenders are charging up to 16.4 percent for business loans and 16.8 percent for overdrafts.

Equity Bank was the first lender to raise its interest rates after receiving the green light from the Central Bank of Kenya to start pricing its loans based on level of customer risk.

Equity said that the lowest it would lend will be at 13 per cent, putting its range between 13 and 18.5 per cent.

The bank said that small businesses will get its loans at between 14 percent and 16 percent while unsecured loans will attract the highest rate.

Kingdom Bank has increased its rate from nine percent to 15.3 percent.

Ecobank Kenya’s overdraft facility for businesses is at 16.8 percent from 12 percent. Its rate for business loans of lower than five-year tenor has jumped from 12.5 percent to 16.4 percent.

The Middle East Bank is charging 16.1 percent, up from 8.1 percent, for personal loans with a tenor of above five percent.

In December 2021, the Central Bank of Kenya was reported to the International Monetary Fund by local bank chief executive officers. The bank CEOs reported CBK to the IMF for refusing to allow them to increase cost of loans.

The local executives said that while the CBK had asked banks to submit loan pricing formula after the lifting of interest rates cap on November 7, 2019, the CBK had failed to approve any of the submitted formulas.

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This had in turn forced local lenders to continue giving loans within the same rates as during the interest rates cap era. For example, the lending rates averaged 12.38 percent in November 2019 when the rate cap was repealed with the Central Bank Rate (CBR) then at 8.5 percent.

In October 2021, the lending rates averaged 12.12 percent.