Kenyan Businesses Are Keeping Off Banks Taking Goods On Credit From Suppliers

by Business Watch Team
Finance underwears

Kenyan businesses are increasingly keeping away from commercial banks from taking loans and paying suppliers, instead opting to negotiate with suppliers and get their products on credit. This is according to the latest trade index released by the Stanbic Bank Africa Trade Barometer.

Given the high cost of borrowing loans and the reduced purchasing power among millions of Kenyan customers, businesses are trying to find new ways to remain afloat including negotiating with suppliers such that they pay them after selling whatever is being supplied.

According to the Trade Barometer, about 58 percent of the total 263 respondents agree to have entered a credit term arrangement with suppliers within eight months leading to May 2023, an increase compared to 44 percent recorded previously in September 2022.

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Small businesses made up 71 percent of the total respondents, followed by large businesses (17 percent) and corporates (13 percent). The biggest jump was recorded among small businesses, with 57 percent of them leaning to supplier arrangement from the previous 43 percent.

About 66 percent of big businesses have equally embraced supplier-credit terms, an increase from 53 percent realized in September 2022. For corporates, 55 percent have adopted the trend, also a rise from 39 percent showing how the economy is not friendly to businesses across the country.

At the same time, Kenya moved up one position to stand at 6 in the latest trade index by the Standard Bank trailing South and West African States.

Kenya moved to position six from seven last year out of 10, trailing South Africa, Namibia, Mozambique, Nigeria, and Ghana in that order.

“Although Kenya is among 54 signatories to the African Continental Free Trade Agreement (AfCFTA), the country’s foreign trade is concentrated in East Africa, China and Europe,” the survey reads in part.

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