NAIROBI, July 15 (Reuters) - Loans restructured by Kenya’s small and medium-sized businesses jumped tenfold in 2020 compared with a year earlier largely due to the impact of COVID-19, the central bank said on Thursday.
The central bank took action last year to help these businesses to survive the economic slowdown brought about by the coronavirus, with many at risk of shutting down.
As part of these measures aimed at cushioning distressed borrowers, the central bank allowed banks in March 2020 to restructure loans for those firms hit by the COVID-19 pandemic.
The central bank said on Thursday the amount of loans that small and medium-sized businesses restructured totalled 234.7 billion shillings ($2.17 billion) last year, up from 20.6 billion shillings in 2019.
“In 2020, restructuring was largely prompted by the adverse impact of the COVID-19 pandemic and sought to cushion affected borrowers by easing debt servicing terms,” the central bank’s survey said.
It said the trade sector accounted for 74.2% of the restructured loans in 2020.
The period for banks to provide relief to customers ended on March 2 this year.
The central bank said at that time the amount of loans whose repayment terms were changed by lenders was 569.3 billion shillings ($5.19 billion) by the end of February this year.
That represented 19% of total loans, down from 57% of total restructured loans at the depth of the crisis, the bank said.
In October, the government set up a credit guarantee scheme for small and medium-sized businesses hit by the coronavirus, and said it expected its capital to eventually rise to at least 100 billion shillings.
Kenya expects its economy to rebound this year with the finance ministry forecasting economic growth of 6.6% in 2021 compared with 0.6% in 2020 when industries like tourism and related services collapsed due to COVID-19-related restrictions. ($1 = 108.1000 Kenyan shillings) (Reporting by George Obulutsa; editing by Omar Mohammed and Jane Merriman)
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