Treasury approves payment of Sh237 billion pending bills.

The National Treasury has so far approved the payout of Ksh 236 billion out of Ksh 600 billion pending bills since President William Ruto took over in 2022.

National Treasury Principal Secretary Dr Chris Kiptoo said priority is being given to invoices belonging to suppliers and road contractors, the majority of which will go to small and medium enterprises (SMEs).

The PS urged the Pending Bill Verification Committee to move fast in order for the amount to be released to the contractors. He said once the amount is released, there will be an increase of the money in circulation which will, in turn, stimulate the economy.

Speaking at the Diamond Trust Bank (DTB) Economic and Sustainability Forum in Nairobi, Kiptoo, said the released amount primarily targets small and medium enterprises.

At the same time, the PS urged commercial banks  to lower their lending rates to allow businesses in the country to borrow more to support economic activities.

The development follows the move taken by the Monetary Policy Committee to lower the Central Bank Rate (CBR) to 10.75 per cent from 11.25 per cent and Cash Reserve Ratio (CRR) to 3.25 per cent from 4.25 per cent.

Kiptoo said the reduction in the CRR would release additional liquidity to banks therefore lowering the cost of funds and lending rates. He said to boost lending to the private sector, the Credit Guarantee Scheme would be transferred to a government-owned company to keep it going.

The Credit Guarantee is currently an arrangement between the government and seven banks where the government commits to pay a portion of the outstanding amount in a case of a default.

Kiptoo urged the financial sector in Kenya to facilitate the inclusion of all sectors in order to drive the economic growth in the country. He said the sector drives financial inclusion and facilitates growth in savings and credit to businesses and individuals.

The PS urged the financial institutions to continue providing innovative products that will meet the demands of micro small and medium enterprises (MSMEs) in line with the Bottom-up Economic Transformation Agenda (BETA) to achieve economic turnaround and inclusive growth.

 “In the coming months we will be rolling out various initiatives to further ramp up our support for an inclusive and sustainable financial services sector,” Kiptoo said.

 During the economic forum, DTB predicted an increase in lending to individuals and small enterprises as Kenya’s economy stabilises and growth becomes steady after the difficult times encountered last year.

DTB Kenya CEO Murali Natarajan said the banking sector’s credit are also likely to double in the next decade from the current US$32 billion (Ksh4.144 trillion) if the current momentum is maintained.

Speaking at the DTB Economic and Sustainability Forum in Nairobi, Natarajan said the immediate impact will be felt by individuals and small businesses.

“When I look at the resilience of the economy and the track record of having dealt with so many challenges, that gives me immense confidence that I feel very confident about going forward,” Natarajan said.

“When I look at the MSME segment, which is partly informal and partly formal, going forward and as banks start focusing on retail and SMEs, I feel that there is a big opportunity there. Working with our team, with the guidance of the board and the Group CEO, we are pretty confident that focusing on the segments, like agriculture, retail, MSME and making it more small ticket and mass, we should be able to double our balance sheet in about three to four years,” Natarajan said.

He said this would entail more focus on the bank’s digital offerings, partnerships and increasing the number of branches to reach more customers.

Natarajan said his forecast is supported by the stability of the Kenyan economy following interventions to reduce interest rates and the effect of plentiful rains and the reduction of fuel prices.

“I congratulate the Government and the Central Bank of Kenya for steering the ship through difficult times last year. The macros look stable, interest rates are coming down, and the flow of remittances from Kenyans abroad continue,” Natarajan said.