CBK Governor Patrick Njoroge. [Photo|capitalfm.co.ke]
Since the Supreme Court validated President Uhuru Kenyatta’s re-election, the local unit has strengthened from 103.90 to the dollar since Monday.
The shilling yesterday strengthened to Sh103 against the US dollar, which is the highest appreciation witnessed since September.
At the same time, the Central Bank of Kenya (CBK) Monetary Policy Committee said it will continue to monitor the impact of the interest rate capping, which has subdued the private sector credit growth which dropped to two percent as at August.
In a statement yesterday, CBK Governor, Dr Patrick Njoroge, said the bank had retained the Central Bank Rate (CBR) at 10 percent due to strong macroeconomic indicators like inflation, commercial banks resilience and foreign exchange reserves.
“Inflationary pressures were muted and inflation was expected to continue to decline in the short term,” he said. The development comes even after it emerged that only five percent of Micro, Small Medium Enterprises (MSMEs) have access to credit from commercial banks despite employing 14.9 million persons.
Micro and Small Enterprises Authority (MSEA) Chief Executive Officer Patrick Mwangi said there is the need for the Government to provide funds to the agency to enable the sector to create employment for millions of the youths.
“The MSE sector is extremely crucial in the development of every country’s economy across the globe. Importantly, in Kenya it contributes above 88 percent of all the new employment opportunities created annually,” he said.
Despite retaining the CBR at 10 percent, analysts say what remains on the cards for the Government is to tackle the current account deficit that hit 6.4 percent of the Gross Domestic Product (GDP) in July, as compared to 6.2 percent of in May.