Cheaper Loans as Kenyan Banks Drop Lending Rates

Hello and welcome to the Money News Roundup Newsletter. Today, we are covering the drop in bank lending rates, increased electricity prices, and a new directive allowing Kenyans to wear sports jerseys to work.

Banks Drop Loan Rates

Kenyans are enjoying cheaper loans as banks continue to lower their lending rates in line with the Central Bank of Kenya’s decision to cut the Central Bank Rate.

A report by Business Daily indicates that the average lending rate has dropped from 17.22 percent to 15.28 percent over several months, marking a 17-month low.

This year alone, the Central Bank has reduced the lending rate three times, settling at 9.75 percent, the lowest since 2024.

On the flip side: While loans have become more affordable, individuals and firms that had invested in financial markets are now earning reduced interest. The report showed that deposit rates have declined for six consecutive months, currently averaging 8.75 percent.

Kenya Power’s Shift to Costly Diesel Power Deepens Electricity Woes

Kenya Power has increased its reliance on expensive diesel-generated electricity during the first five months of the year due to a decline in hydro-power and electricity imports. Data shows that the share of thermal power in the national grid rose to 10.45 percent from 7.6 percent a year earlier. Diesel, the most expensive power source at up to Ksh50 per unit, is far costlier than hydro-power, which averages Ksh3.83 per unit.

According to Daily Nation, this shift has driven up consumer electricity bills. In May, Ksh500 could buy fewer units than it did in December. The continued use of diesel, coupled with rising global fuel prices, has made it harder for Kenya Power to achieve its cost-cutting goals.

Banks Face Legal Setback Over Unapproved Lending Rate Changes

Kenyan banks face significant financial exposure after court rulings stated that lenders must obtain formal approval from the Treasury Cabinet Secretary before changing loan interest rates. Business Daily reports that Stanbic Bank and Spire Bank were found to have breached this requirement, leading to customer refunds and loan adjustments.

The Kenya Bankers Association (KBA) is challenging the legal requirement, arguing that banks have historically received approval from the Central Bank under a 2006 legal notice. This marks the third time KBA is attempting to intervene in the matter. The outcome could reshape how lending rates are regulated in Kenya.

CS Ruku Urges Public Servants to Wear Harambee Stars Jersey in August

Public Service Cabinet Secretary Geoffrey Ruku has called on all public servants to wear the Harambee Stars jersey throughout August in support of Kenya’s national football team during the ongoing CHAN 2024 tournament. He made the appeal ahead of the match between Kenya and DR Congo at Kasarani Stadium.

According to The Standard, Ruku urged those who can afford the jerseys to wear them, while exempting uniformed forces like the police and military. His appeal followed Kenya’s 1–0 win against DR Congo, with Austine Odhiambo scoring the decisive goal. Kenya is co-hosting the month-long tournament with Tanzania and Uganda.

NPS Disowns Officer’s Call to Limit Female Police Recruits

The National Police Service (NPS) has distanced itself from comments made by a Nyahururu-based Officer Commanding Station (OCS) who suggested capping female police recruits at 20 percent, calling them “weak” during protests. “I told all the ladies to remain behind, because they are weak, you find some of them even vomiting on duty,” the officer said during the Jukwaa La Usalama forum in Laikipia.

As reported by Kenyans.co.ke, the NPS affirmed its commitment to gender equality, stating, “Women in the Service continue to play a critical role in policing, law enforcement, and professional service delivery across the Republic and beyond.” Interior CS Kipchumba Murkomen and IG Douglas Kanja also dismissed the officer’s remarks, reiterating the constitutional requirement for gender balance in public service.

Surging Living Costs Put Pressure on Kenyan Households

The cost of living in Kenya continues to rise, with the Kenya National Bureau of Statistics reporting a year-on-year inflation rate of 4.1 percent in July, up from 3.9 percent in June. According to People Daily, prices of essentials like tomatoes, carrots, and kerosene have risen sharply, further straining household budgets. Even items like beans and cabbages, which saw slight monthly declines, remain expensive on an annual basis.

Food costs rose by 6.8 percent compared to July last year. The Institute of Public Finance noted that the food basket remains heavy on the average Kenyan’s wallet, remarking, “It starts with a plate.” With rising fuel costs, stagnant incomes, and heavy taxation, more Kenyans are being pushed into the informal sector as they struggle to make ends meet.