Industry leaders are cautiously optimistic about next year prospects, with 2020 Covid-19 economic disruptions having left their trays with unmet targets.
From banking to insurance and horticulture to investment and aviation, the captains of the industries say the year started well but produced unprecedented packet of challenges they wish to forget.
While they look forward for a recovery in 2021 hinged on discovery of various vaccines for the infectious virus, the discovery of mutant Covid-19 in countries such as UK and South Africa is blunting their optimism.
Equity Group CEO James Mwangi says it may take a while for the impact of Covid-19 on the economy to clear and banks will have to remain vigilant to navigate through an environment of rising loan defaults.
"Covid-19 started as a health crisis, became an economic crisis and a humanitarian crisis. We have to prevent it from ending as a financial crisis,’ says Mr Mwangi.
Mr Mwangi says that he expects a recovery next year supported by the loan book growth the lender has had from September. Another recovery point, he adds, will come from reduced provisioning for loan defaults.
Economic hardships
"About 30 percent of this year’s Equity loan book growth came in the third quarter and so we expect revenues from this lending to start reflecting in this fourth quarter," he says.
Top banks — KCB, Equity, Cooperative Bank, Absa, Stanbic, DTB and Standard Chartered Bank of Kenya — saw a combined 30.2 percent or 22.56 billion decline in profitability in the nine months to September.
Equity spiced up the year by acquiring Democratic Republic of Congo’s BCDC while KCB is set to acquire two banks in Rwanda and Burundi. I&M is also going to acquire a bank in Uganda.
A key headache for banks will however be if the over Sh1.12 trillion or 38 percent of the total loan book that banks had restructured by end of August due to the coronavirus-induced economic hardships will not fall into default status.In the horticultural sector, flower firms are turning the corner on headwinds that hit the sector from mid-March when airports were shut and export markets in European countries such as Netherlands put under strict lockdowns.Kenya Flower Council CEO Clement Tulezi says that the sector had initially put June 2021 as the timing of being close to full recovery but the uptick has come much earlier.Flower exports hit seven-month high of 12,878.04 metric tonnes in September, earning the firms Sh10.51 billion.But […]