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Jijenge Credit bets on growing investor confidence to boost loan uptake

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Kenyan Microlending institution Jijenge Credit ltd is betting big on an improving investor confidence following Monday’s Presidential court petition which upheld William Ruto’s victory at the just just concluded elections held on August 8.

The 7-bench judge led by Chief Justice Martha Koome unanimously dismissed seven petitions challenging Ruto’s victory after his closest competitor Raila Odinga challenged his victory after alleged electoral malpractice.  The country’s apex court however, ruled that Odinga’s legal team lacked evidence to back those claims.

Speaking exclusively to this writer, the firm’s management is also confident of a growing sector despite the economic fallout from the Russia-Ukraine war and lingering Covid-19 pandemic.

“Since the month of July, we have noticed an increased number of inquiries notwithstanding the current economic stress and stretched electioneering period. This is strong evidence that consumers are weathering this excess of challenges,” noted Jigenge’s CEO Peter Macharia in an interview.

Inflationary concerns have been dominating the airwaves recently, rising to a fever pitch in July when the overall inflation rate reached 8.3 percent.

It is hard to miss its impact in recent economic numbers, and now a growing number of SMEs are pressed to the wall.

“You have seen it at the petrol stations, in food prices, or in the housing and real estate market, and for those who follow activities at the Nairobi Stocks Exchange (NSE), you definitely hear about it in the lips of billionaires’ investor talking points. But with the rising level of appetite for business loans, we anticipate a brighter future especially once the Court petition is fully determined,” Macharia notes.

The country’s annual inflation rate has been rising on account of many macroeconomic factors including the Covid-19 pandemic but has intensified due to the ongoing global war between aforementioned countries.

The ensuing effect of rising inflation – which is a general increase in the prices of goods and services in an economy, has led to a slow growth in consumer spending among Kenyans and businesses generally.

In fact, figures by the Kenya National Bureau of Statistics (KNBS) show that the Consumer Price Index CPI in the country rose to 125.05 points in July from 124.22 points in June of 2022.

Inflation has affected growth in real income, thereby curtailing consumers’ purchasing power.

While nominal earnings continue to rise due to labor market tightening, real earnings have been on a broad downward trend since last year and more particularly since the war broke in February this year.

While there are concerns that the Central Bank of Kenya (CBK) could further raise base lending rate by a further 50 basis points on Thursday, September 29, when the next meeting of the Monetary Policy Committee (MPC) is expected to be held, Macharia believes borrowing by SMEs will still carry on.

“We at Fitch Solutions retain our view that the Central Bank of Kenya (CBK) will hike its policy rate by a further 50 basis points (bps) to 8.00 percent by end-2022, after a 50bps hike in May 2022,” noted Fitch Solutions in its latest assessment.

This has spared consumers any increases in the cost of loans after the bank regulator sent its signal to banks to hold interest rates steady.

MPC held the benchmark rate in May raising it to 7.50 percent saying the current monetary policy stance had protected the shilling and reduced the threat of money-driven inflation.

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