Yesterday Equity Bank announced a 22 per cent jump in quarterly profits to Sh5.9 billion (see P15).
CEO James Mwangi said that a cautious approach to lending and lower staff costs because of digital banking boosted profits.
However, he warned that delayed payments by government are crippling small companies and Kenya’s non-performing loan rate is now a very high 12.1 per cent.
Many companies will go bankrupt if government continues to delay paying suppliers and counties.
Any auctioneer can confirm that they are busier than ever. Media houses also know it’s true because they are owed almost Sh3 billion by government.
To make matters worse, banks are parking their deposits in ultra-safe Treasury bills rather than lending to risky SMEs because interest rates are capped. The private sector is being starved of credit.
This should be a wake-up call for government. Investing in infrastructure builds the nation but it should not be at the expense of small and medium companies. Government must pay its debts on time if it wants a strong and vibrant Kenyan economy.
Quote of the day: “All animals are equal, but some animals are more equal than others.”
The English writer published Animal Farm on 17 August, 1945