Credit to private sector declined by 0.5% in July — report
The overall reduction in private sector credit was partly attributed to an increase in commercial lending rates.
Ministry of Finance and Economic Development Permanent Secretary and Secretary to the Treasury, Ramathan Ggoobi. (File photo)
By Umaru Kashaka
Journalists @New Vision
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The stock of outstanding private sector credit declined to 23,785.74 billion shillings (23.785 trillion shillings) in July 2025 (0.5%) from 23,901.94 billion shillings (23.901 trillion shillings) a month earlier.
This decline was primarily driven by reductions in both shilling-denominated credit (-0.06%) and foreign currency-denominated credit (-1.55%) from 17,095.37 billion shillings (sh17.095 trillion) and 6,806.57 billion shillings (sh6.806%) in June 2025 to 17,084.52 billion shillings (sh17.084%) and 6,701.23 billion shillings (6.701 shillings) in July 2025, respectively.
This is according to the August 2025 performance of the economy report by the finance ministry.
The overall reduction in private sector credit was partly attributed to an increase in commercial lending rates.
However, the report says that despite the dip recorded in July, the stock of outstanding private sector credit has generally remained on an upward trend since the start of the calendar year.
Economic experts say private sector credit is a leading indicator of the financial sector’s contribution to economic activity, and its decline in part reflects weakening domestic demand conditions.
They argue that if it increases, it is a sign that economic activity is expanding and that the economy is set to perform better than the previous financial year.
Credit extensions
The report also indicates that the value of credit approved for disbursement in July 2025 amounted to 1,844.74 billion shillings (1.844 trillion shillings) against applications valued at 3,031.31 billion shillings (3,031 trillion shillings), implying a 60.9% approval rate for the month.
Just like in the previous month, personal loans and household loans accounted for the largest share of total credit approved for lending in July 2025, accounting for 28.2% of the total.
This was followed by building, construction, and real estate at 21.7%, trade at 15.1%, business, community social and other services at 12.4%, and agriculture at 8.8%.