NAIROBI, July 15 (Reuters) – Loans being restructured by Kenya‘s small and medium-sized businesses increased ten-fold in 2020 year-over-year, largely due to the impact of COVID-19, the central bank said Thursday.
The central bank took action last year to help these companies weather the economic slowdown caused by the coronavirus, with many threatened with closure.
As part of these measures to cushion troubled borrowers, the central bank allowed banks in March 2020 to restructure loans for companies affected by the COVID-19 pandemic.
The central bank announced Thursday that the total loan amount restructuring small and medium-sized businesses was ATS 234.7 billion ($ 2.17 billion) last year, up from ATS 20.6 billion in 2019.
“In 2020, the restructuring was largely triggered by the negative effects of the COVID-19 pandemic and sought to cushion affected borrowers by easing debt servicing conditions,” the central bank survey said.
In 2020, the commercial sector accounted for 74.2% of restructured loans.
The deadline for banks to relieve their customers ended on March 2nd of this year.
The central bank announced at the time that the size of the loans, the repayment terms of which were changed by the lenders, was 569.3 billion shillings (5.19 billion US dollars) by the end of February this year.
That was 19% of total lending, versus 57% of total restructured lending at the depth of the crisis, the bank said.
In October, the government set up a loan guarantee program for small and medium-sized businesses affected by the coronavirus and said it expected their capital to eventually grow to at least ATS 100 billion.
Kenya expects its economy to recover this year, with the Treasury Department forecasting economic growth of 6.6% in 2021, compared to 0.6% in 2020 when industries like tourism and related services are due to COVID-19 -related restrictions collapsed. ($ 1 = 108,1000 Kenya Shillings) (Reporting by George Obulutsa; Editing by Omar Mohammed and Jane Merriman)
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