The Lower Eastern Times Opening The Third Eye
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A growing number of Kenyan companies are funding their operations and expansion projects using their own resources rather than bank loans, as high interest rates and tough lending terms persist, a new Central Bank of Kenya (CBK) survey shows.
The September 2025 CEOs Survey reveals that most firms now rely primarily on internal financing, with external borrowing taking a back seat despite a modest easing of lending rates since August 2024.
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According to the report, the shift reflects cautious bank lending practices, strict collateral demands, and lengthy approval processes that continue to restrict access to credit—particularly for small and medium-sized enterprises (SMEs).
“Firms continue to rely more on internally generated funds than on external borrowing due to the high credit cost environment,” the CBK noted, adding that banks remain cautious despite lower policy rates.
Although some executives acknowledged a slight drop of 1–2 percent in loan rates, access to financing remains limited as banks still perceive SMEs as risky borrowers.
Technology Driving Growth
The survey further shows that 78 percent of firms have embraced new technologies and automated core operations over the past year, significantly improving efficiency.
Businesses highlighted automation in areas such as customer service, accounting, and regulatory compliance as key to reducing costs and boosting productivity. However, high setup expenses, inadequate digital skills, and cybersecurity concerns continue to pose challenges.
The ICT, manufacturing, and financial sectors were identified as frontrunners in digital transformation.
Positive Outlook
Despite financing hurdles, most business leaders remain optimistic about 2026, citing innovation, market expansion, and operational efficiency as drivers of future growth.
The agriculture, manufacturing, and ICT sectors are expected to lead this growth, supported by favorable weather conditions, automation, and rising consumer activity.
However, elevated operating costs, subdued demand, and global trade uncertainties could temper the outlook.
The CBK concluded that Kenya’s private sector is adapting through innovation and self-financing, but emphasized that improving credit access and reducing the cost of doing business will be vital to sustaining long-term growth.
