The reduction in the Central Bank's base rate in September has increased the demand for new loans from different sectors in the economy. According to reports from the Central Bank of Kenya, trade and personal loans saw the highest increase in demand for new loans with the biggest factor for this being the drop in the CBR.

"Demand for credit increased in the personal/households, building &construction and trade sectors. None of the sectors experienced a decrease in demand for credit in the quarter." Read part of the Central Bank Report on findings from a survey carried out recently.

According to the findings 54% of the respondents of the credit survey under analysis reported an increase in the demand for credit to personal and household sector as compared to 42% of the respondents in the June 2012. Generally, there was a notable increase in the demand for credit in the quarter ended September 2012 as compared to the quarter ended June 2012.

[caption id="attachment_24596" align="aligncenter" width="809"] Demand for household and trade loans have increased. (Data: CBK)[/caption]

The drop in CBR, according to the survey, had the most significant impact in increasing demand for credit. Issuance of debt securities (77 % of the respondents) and issuance of equity (78 % of the respondents) as well as loans from non banks were reported to have had the least impact on demand of credit in the quarter.

Factors Affecting Demand for Credit

[caption id="attachment_24597" align="aligncenter" width="848"] Data: CBK[/caption]