Kenya CRB listing relief ends, here’s how this impacts loan defaulters

Tomorrow marks the end of a six-month relief on listing loan defaulters which the Kenyan Central Bank implemented as part of a stimulus package to cushion distressed businesses and individuals from the effects of the COVID-19 pandemic. To understand the implications of this relief and whether it could be extended, CNBC Africa spoke to Eric Musau, Head of Research at Standard Investment Bank. The relief has been a welcomed reprieve for borrowers amidst the uncertainty caused by the pandemic. However, the looming end of this relief raises questions about potential blacklisting of defaulters by banks. The Central Bank's monetary policy committee meeting today will shed light on whether the relief will be extended or not, as failure to extend it could lead to banks fulfilling their legal obligation to provide listings. The reaction from both lenders and customers has been subdued so far, as the true impact will become apparent in the coming weeks. Non-performing loans have surged this year, prompting the need for lenders to fortify their credit departments and strategize on addressing these defaults as the economy gradually reopens. The approval of a credit guarantee scheme for SMEs by the cabinet is a step in the right direction, but its effectiveness remains uncertain. More efforts may be needed to improve credit access for SMEs, including not only financial support but also training, seed capital, and long-term sustainability measures. Overall, while the worst may be over, a concerted effort is needed to ensure a robust recovery and support for businesses in Kenya.