Kenya’s banking industry invested 2.1 billion shillings in Corporate Social Responsibility (CSR) in 2018, according to the 2019 Kenya Banking Industry Shared Value Report released by the Kenya Bankers Association (KBA).
The report further indicates that approximately 6.7 billion shillings have been invested in CSR programs over the past three years.
Education ranks first as the top social investment area for banks, followed by health and environment.
Overall, banks have donated in excess of 9 billion shillings since 2015 in CSR activities, which has contributed greatly to Kenya’s realization of the Sustainable Development Goals (SDGs).
Direct support for various initiatives by banks was realized through marketing and sponsorships with the cumulative industry cause-related marketing standing at 1.7 billion shillings in 2018, up from 1 billion shillings in 2017.
The National Government has also benefited tremendously from banks’ profitability because figures indicate that tax revenue paid to the Government has increased exponentially over the years. In the 2017/2018 financial year, for instance, banks paid more than 73 billion shillings to the Kenya Revenue Authority (KRA).
Over the same period, commercial banks spent 39 billion shillings creating employment opportunities for the more than 30,000 employees in the sector.
As at September 2018, banks had lent a total of 2.53 trillion shillings to various sectors that drive the economy.
Nonetheless, the report highlighted a few hurdles faced by the industry, including the Banking (Amendment) Act, 2016, which introduced interest rate controls.
According to KBA CEO, Dr Habil Olaka, the interest rate ceiling set by Parliament has negatively impacted private sector access to credit, which has led to an estimated 1.4 percent decline in GDP.
Despite the interest rate caps, banks have been able to respond to credit needs through 2 innovative approaches such as leveraging on the Movable Property Registry on the e-citizen portal.
The Registry, which was introduced by the Movable Property Security Rights Acts, 2017, has aided banks to lend to individuals and SMEs with assets that are not land-related.
As it now stands, 183,000 loans worth 3.65 trillion shillings have been registered, with further support from KBA coming in the form of the development of the Inuka Enterprise Program which was designed to de-risk MSMEs so that they can in turn access bank loans.