I think the potential 'growth' in lending vai M-Pesa (p2p) is huge though this would be on a trust basis therefore limited to friends/family.

In any case, the overall p2p lending would be small in relation to the banks lending portfolio.

[[i]i]The CBK inflation targets have been met with inflation declining from 9.6% to 6.6%, so expansionary policy is likely to continue. CBK's inflation-targeting has been successful and they sent signal of a further reduction in rates in Dec to add further impetus to government stimulus....says scubidu( a very respectable SK economist)

i say...

the stimuli that wud work best need to be radical...cut CRR by 100 bps force banks to lend...cut personal income tax..encourage households to spend...very radical but imho most effective..otherwise i thnk pseudo economics will rule and ndungu will keep cuttin his useless cbr mpaka maybe it hits zero...

People starting to question inflation figures. BD, page 4 of the front-page article reads "TNS Research International November consumer market survey indicated that inflation remains a major point of concern in Kenya and is expected to continue weighing down on demand. The survey found that nearly half the Kenyan population still planned to cut expenditure on expectation that inflationary pressure will continue in the next six months."

Is there a disconnect between the inflation figures and prices on the ground? The article goes on to say the old calculation "had an inbuilt upward bias...portrayed Kenya as a high inflation economy". So was the change in calculation to enhance accuracy or more of a marketing tool to boost our image and economic growth?

@Kizee. Firstly. I'm not an economist or banker or lecturer, just a spectator. I really love this forum cos I can say whatever I want (bull or not) and remain anonymous. It seems bank credit is beginning to flow (or trickle) to consumers (slowly), but they're not spending at least according to the last BD article on inflation.

People are holding more cash and as I understand they usually do this when purchasing power is low (prices are high). Not since Sept-08 has their been an excess supply of currency outside the banking system (based on CBK target). So in last week's CBK bulletin the CBK pumped in at least Kshs16.2 billion in open market operations...so is this in anticipation of cash demand for xmas shopping?

@VVS. I can never figure out the NPL figures for some banks. Some bank's have zero NPL exposures such as Equity Bank but others like Barclays&Co-op aren't so lucky. I think the numbers should be higher. Considering the food reserve deficit, I think we'll be forced to import to buy wheat for NCBP, oil for KenGen's EPPs, cars for GOK's (stimulus) fleet. We don't manufacture much and according to KAM, from what we've manufactured, the demand for those goods is down 30%.

@scubidu - In a high inflationary environment, people do not save... they 'buy' or 'invest'. Why put money in a savings account that pays 3% when the inflation is 6%? You lose value!

Ya'll definately need to check out this site http://www.moneyasdebt.net/ . I just finished watching the two movies (money as debt) about modern banking and they are crazy good (although they're a bit animated, but easy to watch).