Kenya reports decline in credit to mining sector

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Kenya reports decline in credit to mining sector

Credit to the mining sector in Kenya has reported a decline to a six-year low despite an increase in lending to other sectors in line with the economic recovery after the Covid-19 slump.

Latest data from Central Bank of Kenya (CBK) shows that the total loans to the mining sector stood at Sh10.9 billion in August, the lowest since July 2015. This was a credit growth declined of 23.1 percent from Sh14.1 billion in same period last year.

Mining and quarrying has been the only sector that has registered drop in growth in uptake of credit in the economy, even though it accounts for 0.7 percent of the country’s GDP. Sectors such as manufacturing, transport and communication, and construction registered 9.3 percent, 11.8 percent and 1.7 percent credit expansion to Sh437.8 billion, Sh237.9 billion and Sh121.0 billion respectively.

Global chain supply

Mining sector was hurt last year due to global chain supply constraints, worsening existing licensing challenges that reduced investor appetite. Earnings from mineral sales dropped by Sh1.5 billion in 2020 to Sh22.7 billion compared to the previous year.

This was attributed to decline in demand for minerals in international market, slowed operations by local miners and global supply constraints that hurt miners’ ability to export. Kenya has deposits of gold, and coal and is also said to hold significant deposits of copper, niobium, manganese, rare earth minerals, and titanium which is main export revenue earner.

Kenya has not renewed or issued any new mining licence since 2015 when then Mining Cabinet Secretary Najib Balala revoked the licences of 65 companies, forcing firms to operate under a gazette notice.

The Mining ministry had slotted to complete a survey mapping Kenya’s resources in June and pave way for lifting of a moratorium on exploration of licences. The survey that costs Sh3 billion was covering Migori, Homa Bay, Siaya, Kakamega and Busia. The Kenya’s untapped mineral sector is stated to have potential of earning the country $6.6 billion (Sh719.4 billion) or 12 percent of the gross domestic product (GDP) from the minerals sector.

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