The Central Bank’s November survey shows that 43 per cent are very optimistic about economic growth in 2026 compared to 2025.
Forty per cent are expecting the expansion to stagnate, with 16.7 per cent expecting it to worsen in the coming year.
Speaking at the post-Monetary Policy Committee (MPC) press briefing, the Central Bank of Kenya (CBK) governor, Kamau Thugge, said the optimism has been rising in the past months, driven by easing loan rates and a stable foreign exchange regime.
“The optimism was attributed to resilient agricultural production supported by favourable weather conditions, the stable macroeconomic environment with low inflation and stable exchange rate, declining interest rates, and improved private sector credit growth,’’ Thugge said.
“Some respondents expressed concerns about subdued consumer demand, the high cost of doing business, and increased global uncertainties attributed to higher tariffs and geopolitical tensions.”
There is also increased optimism amongst top bank executives, with 87 per cent hopeful that the economic situation in the country will improve in 2026, while only 13 per cent expect it to worsen. Eight out of 10 CEOs from the non-banking sector hope for a better 2026, while 20 per cent anticipate a tougher economy in the coming year.
According to the Central Bank, the economy is expected to expand by 5.2 per cent this year and 5.5 per cent in 2026. This is a growth of 50 and 80 basis points compared to a growth of 4.7 per cent reported in 2024.
The optimism of the CEO is reflected by the growth of activities in the private sector, which touched a five-year high in November on ease of borrowing, granting traders access to cheap loans, while a stable shilling lowered import costs.
The Purchasing Managers’ Index (PMI) hit 55 in November, up from 52.5 in October and the highest since October 2020.
Readings above 50 signal an improvement in business conditions from the previous month, while readings below 50 show deterioration.
According to the report by Stanbic Bank, the upturn was mainly driven by a much sharper increase in sales volumes compared to the previous survey period.
Surveyed companies frequently noted that improved purchasing power among customers contributed to higher sales volumes. This trend was partly linked to a moderation in inflationary pressures, as evidenced by the survey data.
Volumes of new business rose for the third consecutive month in November, with the pace of expansion climbing to a sharp rate that was the most pronounced in just over five years.
All sub-sectors experienced growth, as companies highlighted improved client purchasing power, successful marketing strategies, increased referrals, and the launch of new products.
The apex bank is crediting the growth to sound monetary polices that have seen the base lending rates reviewed nine consecutive times.
On Tuesday, the regulator further cut the base lending rate by 25 basis points to nine per cent, down from 9.25 per cent.
The decision extends a cycle of rate reductions aimed at stimulating credit to the private sector while inflation remains comfortably within the government’s target band.
Growth in commercial banks’ lending to the private sector continued to improve and stood at 6.3 per cent in November 2025 compared to 5.9 per cent in October and -2.9 per cent in January.
Growth in credit to key sectors of the economy, particularly manufacturing, building and construction, trade and consumer durables, remained strong in November.
This mainly reflects improved demand for credit in line with the declining lending interest rates.
Average commercial banks’ lending rates declined to 14.9 per cent in November 2025 from 15 per cent in October, and 17.2 per cent in November 2024.
The ratio of gross non-performing loans to gross loans dropped to 16.5 per cent in November 2025, down from 16.7 per cent in October and 17.6 per cent in August.
The apex bank says that Kenya’s overall inflation declined to 4.5 per cent in November 2025 from 4.6 per cent in October, and remained below the mid-point of the target range of 5±2.5 percent.
Core inflation declined to 2.3 percent in November from 2.7 per cent in October, mainly on account of lower prices of processed food items, particularly maize flour and sugar.
Non-core inflation increased to 10.1 percent in November from 9.9 percent in October, mainly driven by higher prices of vegetables, particularly tomatoes, onions and cabbages.
“Overall inflation is expected to remain below the midpoint of the target range in the near term, supported by lower prices of processed food items, stable energy prices, and continued exchange rate stability.”
by VICTOR AMADALA
