Kenyan banks lead African peers in SME lending

{{Kenyan commercial banks are earning the highest proportion of income from lending cash to Small and Medium Enterprises (SMEs) compared to other African lenders, a World Bank survey has established.}}

More than a fifth (20.5%) of Kenyan banks’ net income is earned from lending to SMEs, nearly double the proportion that Nigerian banks make from the mid-sized enterprises according to the World Bank research released last week.

South African banks trace 15% of their income from lending to SMEs, Tanzanian lenders make 16%, while Rwanda comes closest to Kenya at 20%.

“The difference between Kenya and most other sub-Saharan African countries is that innovation started through a combination of microfinance-rooted institutions scaling up to becoming commercial banks and innovation with lending models and technology in the retail banking segment by other institutions, most notably Equity Bank,” states the report authored by World Bank researchers, Gunhild Berg and Michael Fuchs.

In Kenya, the research found that 17.4% of total bank lending goes to SMEs, whereas it stands at 17.0% in Rwanda. Nigeria, South Africa and Tanzania lag behind in SMEs’ share of total bank lending at five, eight and 14% respectively.

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