Kenya’s Economy Poised for Faster Growth in 2026 as Falling Credit Costs Spur Optimism

Kenya, 13 November 2025 - Kenya’s economy is expected to accelerate in 2026, supported by declining borrowing costs, stronger export performance, and improved household spending, according to a consensus of global banks, consultancies, and think-tanks.

What’s Changing

The December 2025 Focus Economics Consensus Forecast projects Kenya’s GDP growth at 5.0 % in 2026, up from an estimated 4.9 % in 2025.

This places Kenya above the Sub-Saharan African average of 4.1 percent.

A key driver of this improvement is the Central Bank of Kenya’s (CBK) sustained easing of credit costs. Since February 2025, the policy rate has been lowered from 11.25 % in January to 9.50 % by August, marking seven consecutive reductions aimed at stimulating lending, investment, and household spending while keeping inflation within target.

Economists at the Economist Intelligence Unit (EIU) highlight the impact of cheaper credit on investment:

“In 2025, economic growth should strengthen as accelerating fixed investment, buoyed by laxer financing conditions, outweighs softer momentum in exports.”

However, surveys such as the one conducted by TransUnion Kenya in August 2025 reveal that high borrowing costs continue to limit access to formal credit, with 68 % of potential borrowers refraining from applying due to affordability concerns.

CBK has acknowledged these challenges, stating that there remains scope for further easing of the monetary stance to support private-sector credit and economic activity.

Timeline of Recent Interest-Rate Moves in Kenya:

• February 2025: Policy rate lowered to 10.75 % from 11.25 %.
• April 8, 2025: Rate cut by 75 bps to 10.0 %, fifth straight reduction.
• June 10, 2025: Rate cut by 25 bps to 9.75 %, sixth consecutive cut.
• August 12, 2025: Rate cut by 25 bps to 9.50 %, seventh consecutive reduction.Despite these cuts, average bank lending rates remain around 15.77 %, indicating a lag in the transmission of policy easing to borrowers.

Why Is this important?

Lower credit costs unlock key growth channels. Cheaper lending encourages businesses to invest in expansion, equipment, and jobs while enabling households to borrow for consumption and asset accumulation.