Kenya Banking & Financial Services Q2 2018
The Kenyan banking and financial sector saw greater stability following the outcome of disputed presidential elections inOctober 2017. The feared post-election violence did not occur, although President Kenyatta's opponent Raila Odinga continues topose a political risk, having sworn himself in as 'president of the people' in an unofficial ceremony in January 2018. Should thepolitical dispute not upset social stability, which would have adverse effects on the economy, we envisage 10.4% growth in nominalnet value added (NVA) for the finance sector to USD6.27bn, equating to 7.9% of total NVA. Nevertheless, factors such as interest ratecaps and reluctance to borrow are undermining asset growth in the banking sector with banks likely to turn increasingly toalternative forms of investment, notably government securities. Structurally, weak governance remains a problem in the bankingsector, although consolidation and improved regulation are reducing the likelihood of further bank closures.
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