Tuesday, 10 May 2016

By Reagan Nyadimo
The banking sector has not bounced back strongly from the great recession.  Inasmuch as Kenya remains an example in financial inclusion new regulations slapped on the industry following the collapse of the 3 lenders continues to haunt financial Institutions. In fact, as country we risk financial meltdown.
As we speak, the Kenya’s banking industry has stagnated in the first 3 months of the year 2016. This slow down which has been supported by decrease in gross loans, banking assets and stagnant customers’ savings signals eroded confidence level in the sector.  In my opinion, this is due to the unprofessional handling of the Chase bank which was closed due to run of deposit. 

The effect of this ground shaking disruption in the Industry which have contributed to flight of deposits to banks perceived as “stable” have forced small lenders to halt lending.  This temporary action to avert liquidity crunch by the small lenders have led to massive losses in interest income.  With the look of things, this is not just small lenders problem.We are to see more of these in the coming days as the reality of the enforcement of regulations begins to weigh down on the industry.  
The sad reality is that as the industry glares into Q3 with this nasty hangover, massive layoffs will be inevitable. This coupled with lack of credit to finance development will definitely have negative effect on our GDP.

There is a wide spread panic in the industry which if not acted upon in good time, we will have ourselves to blame in the coming months. 

The writer is former Assistant business analyst and currently private sector advisory leader in Kenya.
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1 comment:

  1. The greed levels in Kenya is alarming. I personally don't expect much from this bandit economy.


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