Private sector credit growth in November 2023 remained sluggish at 9.9%, declining from October’s 10%, as banks hesitated to lend amid pre-election business uncertainty. Rising deposit growth reached 10.32% in November, the highest in a year, boosted by increased interest rates post the removal of the single-digit lending rate cap in July.
Bankers indicate that the net growth in private sector credit over the past year has been less than 10%, well below the normal growth rate of 15%, attributing it to reduced capital machinery and raw material imports due to pre-election unrest and economic slowdown.
The central bank’s policy rate hikes have also elevated interest rates on customer loans, leading to decreased loan uptake. The central bank aims to curb inflation, targeting an 8% rate for December. Private credit growth had fallen for ten consecutive months until October, increasing by 0.40 basis points in November.
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