The KENYA INSTITUTE for PUBLIC
POLICY RESEARCH and ANALYSIS
Thinking Policy Together
JULY – SEPTEMBER 2023
www.kippra.or.ke
 
 
 
TABLE OF CONTENTS 
1. PERFORMANCE IN THE REAL SECTOR .............................................. 3 
2. INTERNATIONAL MARKETS ............................................................. 10 
3.MONETARY AND FINANCIAL SECTOR .............................................. 16 
4.FISCAL PERFORMANCE .................................................................... 22 
5.CAPITAL MARKETS ........................................................................... 29 
6.RISK-RELATED FACTORS ..................................................................35 
 
  
2 
 
 
 
 
1. PERFORMANCE IN THE REAL SECTOR 
Growth in the global economy is projected to fall from an estimated 3.5 per cent in 2022 
to 3.0 per cent in 2023 and further to 2.9 per cent in 2024, driven largely by downside 
risks including a slowdown in China’s growth, persistence of underlying inflation, and 
more volatile commodity prices amid geopolitical and climate shocks. Growth in 
emerging markets and developing economies is projected to be broadly stable at 4.0 per 
cent in 2023 and 4.1 per cent in 2024. For Sub-Saharan Africa, growth is projected to 
decline from 3.9 to 3.5 per cent in 2023 before picking up to 4.1 per cent in 2024. 
Kenya’s economy grew by 5.4 per cent in the second quarter of 2023 compared to a 5.2 
per cent growth in the similar quarter in 2022. It is, however, projected to grow at 5.1 per 
cent in 2023 and 5.3 per cent in 2024. The inflation rate remained within the government 
target range of 5+/-2.5 per cent in the third quarter of 2023, averaging 6.9 per cent. The 
inflation rate for June, July, and August 2023 was at 7.3, 6.7, and 6.8 per cent, 
respectively. The recorded inflation rates are lower when compared to neighbouring 
countries in the East African region. For example, the average inflation rate for the third 
quarter of 2023 for Tanzania, Rwanda, Burundi, and Ethiopia were 3.3, 18.4, 27.4 and 
28.5 per cent, respectively.  
The performance of capital markets as measured by the benchmark indicator (NSE20) 
experienced a decline during the third quarter of 2023, exhibiting a similar trend in the 
same period in 2022. The NSE20 declined from 1,577.3 points in July 2023 to 1,508.8 
points by the end of September 2023. This performance was weaker compared to the 
same period in 2022 when the NSE Index averaged 1,723.4. 
a.  GDP Performance  
Figure 1: GDP growth, inflation, and stock market performance 
12 10.3 4500
10 4200
3900
8
6 5.2 5.4
3600
3300
4 3000
2 2700
0 2400
2100
-2
1800
-4 1500
-4.1
-6 1200
Quarterly GDP Growth (%) Overall Inflation (%) NSE20 Index
 
Data source: Kenya National Bureau of Statistics Quarterly GDP & Consumer Price 
Index (Various issues); Nairobi Securities Exchange daily stock performance 
  
3 
 
Inflation and quarterly GDP growth 
rate (%)
NSE20 Index
 
 
 
Figure 2: Quarterly GDP growth rates for selected advanced and emerging 
markets 
25.0
20.0
15.0
10.0
5.0
0.0
-5.0
-10.0
-15.0
-20.0
-25.0
July- April- Jan- Oct- Jul-Sept 2023
Sept June  Mar Dec
2020 2021 2022 2022
Kenya USA UK Japan China
France Mexico Brazil S. Africa  
Data source: World Economic Outlook October 2023 Update 
Figure 3: Global annual growth projections 
8.0
6.7
6.2
6.0 5.4
4.7
4.1 4.0 4 4 4
4.0 3.5 3 3.32.6 2.9
2.0 1.5 1.4
0.0
2020 2021 2022 2023* 2024*
-2.0
-2.0-1.6
-4.0 -3.1
-4.5
-6.0
Global economy Advanced Economies
Emerging Market and Developing Economies Sub-Saharan Africa
 
Data source: World Economic Outlook October 2023 Update 
  
4 
 
Annual GDP growth rates (%) Quarterly GDP growth rates (%)
 
 
 
Figure 4: Cement production and consumption (‘000 MT) and index of value 
of building plans 
950.0
24000.0
900.0 22500.0
850.0 21000.0
19500.0
800.0 18000.0
750.0 16500.0
15000.0
700.0 13500.0
650.0 12000.0
10500.0
600.0 9000.0
7500.0
550.0
6000.0
500.0 4500.0
3000.0
450.0
1500.0
400.0 0.0
Cement Production ('000 MT) Cement Consumption ('000 MT)
Index of Value of Building Plans (Dec 1972=100)
 
Data source: Central Bank Monthly Economic Indicators  
Figure 5: Kenya Housing and Property Indices 
520
500
480
460
440
420
400
380
360
Hass Composite Property Sales Index Hass Composite Property Rental Index
 
Data source: Hass Composite Property Sales Index: Year 2000 = 100; Data Source: 
Hass Property Index (http://hassconsult.co.ke/real-estate/hass-index/) 
5 
 
Hass Composite Index
Jan-20 Jan-20Feb-20
Mar-20 Mar-20
Apr-20
May-20 May-20
Jun-20
Jul-20 Jul-20
Aug-20
Sep-20 Sep-20
Oct-20
Nov-20 Nov-20
Dec-20
Jan-21 Jan-21
Feb-21
Mar-21 Mar-21
Apr-21
May-21 May-21
Jun-21
Jul-21 Jul-21
Aug-21
Sep-21 Sep-21
Oct-21
Nov-21 Nov-21
Dec-21
Jan-22 Jan-22
Feb-22
Mar-22 Mar-22
Apr-22
May-22 May-22
Jun-22
Jul-22 Jul-22
Aug-22
Sep-22 Sep-22
Nov-22 Oct-22Nov-22
Jan-23 Dec-22Jan-23
Mar-23 Feb-23
Mar-23
May-23 Apr-23
May-23
Jul-23
 
 
 
Figure 6: Intake of processed milk in the formal sector (million litres) 
80
75
70
65
60
55
50
45
40
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2020 2021 2022 2023
 
Data source: Central Bank Monthly Economic Indicators  
Figure 7: Monthly tourist arrivals (number) 
160000
140000
120000
100000
80000
60000
40000
20000
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2019 2020 2021 2022 2023
 
Data source: Central Bank Monthly Economic Indicators  
  
6 
 
Milk intake in the formal sector(million 
litres)
 
 
 
b)  Price movement  
Figure 8: Comparative inflation for selected countries in Africa 
59.0
57.0
55.0
53.0
51.0
49.0
47.0
45.0
43.0
41.0
39.0
37.0
35.0
33.0
31.0
29.0
27.0
25.0
23.0
21.0
19.0
17.0
15.0
13.0
11.0
9.0
7.0
5.0
3.0
1.0
-1.0
-3.0
-5.0
Kenya Uganda Tanzania Rwanda Burundi S. Africa
Namibia Zambia Ghana Nigeria Ethiopia
Data source: Central banks of various countries 
Figure 9: Domestic wholesale agriculture commodity prices (Ksh/kg) 
170.0
160.0
150.0
140.0
130.0
120.0
110.0
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Kales Cereals Legumes Tubers Fruits & Vegetables  
Data source: Calculated by KIPPRA using data from Ministry of Agriculture 
  
7 
 
Inflation rate (%)
Jan-20
Feb-20
Mar-20 Jan-20
Apr-20
May-20 Mar-20
Jun-20
Jul-20 May-20
Aug-20
Sep-20 Jul-20
Oct-20
Nov-20 Sep-20
Dec-20
Jan-21 Nov-20
Feb-21
Mar-21 Jan-21
Apr-21
May-21 Mar-21
Jun-21
Jul-21 May-21
Aug-21
Sep-21 Jul-21
Oct-21
Nov-21 Sep-21
Dec-21
Jan-22 Nov-21
Feb-22
Mar-22 Jan-22
Apr-22
May-22 Mar-22
Jun-22
Jul-22 May-22
Aug-22
Sep-22 Jul-22
Oct-22
Nov-22
Dec-22 Sep-22
Jan-23
Feb-23 Nov-22
Mar-23
Apr-23 Jan-23
May-23
Jun-23 Mar-23
Jul-23
Aug-23 May-23
Sep-23
Jul-23
Sep-23
 
 
 
Figure 10: Contribution of selected CPI baskets to overall inflation (%) 
6.00 1.6
5.50
1.4
5.00
4.50 1.2
4.00
3.50 1.0
3.00
0.8
2.50
2.00 0.6
1.50
1.00 0.4
0.50
0.2
0.00
-0.50 0.0
Food & Non-Alcoholic Beverages Fuel Inflation (%)
Housing, Water, Electricity, Gas and other Fuels Clothing & Foot-wear
Health
 
Data Source: Kenya National Bureau of Statistics Consumer Price Monthly Rates 
Central Bank of Kenya monthly Economic Indicators various issues 
  
8 
 
Food, Non-Alcoholic Beverages and Fuel Inflation
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Health, Housing,Water and Electricity, Clothing and Footwear
 
 
 
Figure 11: Average domestic pump prices and global crude 
220.0 135.0
200.0
115.0
180.0
95.0
160.0
140.0 75.0
120.0
55.0
100.0
35.0
80.0
60.0 15.0
Motor Gasoline Premium (Kes/L) Light Diesel Oil (Gasoil) (Kes/L)
Illuminating Kerosene (Kes/L) Opec  basket Crude Oil Prices (US$/Barrel)
Data Source: Kenya National Bureau of Statistics; Energy and Petroleum Regulatory 
Authority; https://www.opec.org/opec_web/en/data_graphs/40.html 
Figure 12: Consumer Price Index and Producer Price Index 
 138.0 144
 136.0 142
 134.0 140
138
 132.0
136
 130.0 134
 128.0 132
 126.0 130
 124.0 128
 122.0 126
 120.0 124
122
 118.0
120
 116.0 118
 114.0 116
 112.0 114
 110.0 112
 108.0 110
108
 106.0
106
 104.0 104
 102.0 102
 100.0 100
Producer Price Index Consumer Price Index
 
Data source: Kenya National Bureau of Statistics CPI and PPI Monthly Rates. CPI base 
year: February 2019 = 100; PPI base year: March 2019 = 100 *Producer Price Index 
9 
 
Consumer Price Index Average local retail prices (Kshs./Litre)
Jan-20
Feb-20
Mar-20 Jan-20
Apr-20
May-20 Mar-20
Jun-20
Jul-20 May-20
Aug-20
Sep-20 Jul-20
Oct-20
Nov-20 Sep-20
Dec-20 Nov-20
Jan-21
Feb-21 Jan-21
Mar-21
Apr-21 Mar-21
May-21
Jun-21 May-21
Jul-21
Aug-21 Jul-21
Sep-21
Oct-21 Sep-21
Nov-21
Dec-21 Nov-21
Jan-22
Feb-22 Jan-22
Mar-22 Mar-22
Apr-22
May-22 May-22
Jun-22
Jul-22 Jul-22
Aug-22
Sep-22 Sep-22
Oct-22
Nov-22 Nov-22
Dec-22
Jan-23 Jan-23
Feb-23
Mar-23 Mar-23
Apr-23 May-23
May-23
Jun-23 Jul-23
Jul-23
Aug-23 Sep-23
Sep-23
OPEC basket crude oil prices (US$/barrel)
Producer Price Index
 
 
 
2. INTERNATIONAL MARKETS 
The monthly coffee exports increased significantly to Ksh 5,186.01 million as at June 
2023 from Ksh 3,835.70 million in June 2022, reflecting the favourable long rains. The 
monthly tea exports also saw an increase from Ksh 13,729.67 million in June 2022 to Ksh 
15,446.15 million in June 2023. The expanding market for coffee and tea is welcome news 
for foreign exchange earnings to ease pressure on the exchange rate.  
The Kenya Shilling depreciated against the US Dollar by 21.65 per cent between 
September 2022 and September 2023 to 146.77. Similarly, the Tanzanian Shilling, 
Rwandan Franc, Burundian Franc, South Africa Rand depreciated by 7.5, 14.3, 36.6, and 
4.5 per cent to 2,500, 1,210.5, 2,821.7 and 18.9, respectively, in the quarter ending in 
September. The Ugandan Shilling depreciated by 2.6% to 3,748 in September. The USD 
Index remained above the 100-mark throughout the quarter to close at 105.815, implying 
that appreciation of the US Dollar was maintained during the period.  
Diaspora remittances are useful for improving a country’s balance of payments and 
increasing foreign reserves. The remittances amounted to US$ 354.4 million in August 
2023, which represented a drop from US$ 378.1 million in July 2023. This was, however, 
an increase from 310.5 in August 2022. 
The average months-of-import cover declined in the second quarter of 2023 to 3.19 
compared with the same period in 2022, which had 5.06. Foreign remittances have 
become an important source of Kenya’s foreign exchange, thus helping to stabilize the 
country's exchange rate, improve the balance of payments, and enhance the ability to 
make international transactions. 
Figure 13: Trends in coffee and tea production (MT), exports (Ksh millions) 
and auction prices (Ksh/Kg)  
Figure 13(a): Monthly coffee production (MT) 
7,000.0
6,000.0
5,000.0
4,000.0
3,000.0
2,000.0
1,000.0
0.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2020 2021 2022 2023
 
Data source: Kenya National Bureau of Statistics; Nairobi Coffee Exchange 
(http://nairobicoffeeexchange.co.ke/) 
  
10 
 
Coffee production (MT)
 
 
 
Figure 13(b): Monthly coffee exports (Ksh million) 
6000
5000
4000
3000
2000
1000
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2020 2021 2022 2023
 
Data source: Kenya National Bureau of Statistics; Nairobi Coffee Exchange 
(http://nairobicoffeeexchange.co.ke/) 
Figure 13(c): Comparison between global coffee exports (MT) and Kenya 
coffee exports (% of global total exports) 
 900,000  1.4
 800,000  1.2
 700,000
 1.0
 600,000
 500,000  0.8
 400,000  0.6
 300,000
 0.4
 200,000
 100,000  0.2
 -  -
Global Coffee Exports Kenya Coffee Exports  as a % of global exports
 
Data source: Kenya National Bureau of Statistics; Nairobi Coffee Exchange 
(http://nairobicoffeeexchange.co.ke/); International Coffee Organization 
(http://www.ico.org/coffee_prices.asp) 
  
11 
 
Global Coffee Exports (MT)
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Kenya Coffee Exports (% of Global 
Exports) 
 
 
 
Figure 13(d): Monthly Kenya coffee auction prices (Ksh/Kg) and global 
composite prices (US cents/lb) 
900.0 250
800.0
200
700.0
600.0 150
500.0
400.0 100
300.0
50
200.0
100.0 0
Kenya Coffee Auction Prices  2020 Kenya Coffee Auction Prices  2021
Kenya Coffee Auction Prices 2022 Kenya Coffee Auction Prices 2023
Global Coffee Composite Prices 2020 Global Coffee Composite Prices  2021  
Data source: Kenya National Bureau of Statistics; Nairobi Coffee Exchange 
(http://nairobicoffeeexchange.co.ke/); International Coffee Organization 
(http://www.ico.org/coffee_prices.asp) 
Figure 13(e): Monthly tea production (MT) 
 65,000.00
 55,000.00
 45,000.00
 35,000.00
 25,000.00
2020 2021 2022 2023
 
Data source: Kenya National Bureau of Statistics; East African Tea Trade Association 
  
12 
 
Kenya Coffee Auction Prices (KSh./Kg)
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Global Coffee Composite Prices (US cents / lb)
 
 
 
Figure 13(f): Monthly tea exports (Ksh million) 
 18,000.00
 16,000.00
 14,000.00
 12,000.00
 10,000.00
 8,000.00
 6,000.00
 4,000.00
 2,000.00
 -
2020 2021 2022 2023
 
Data source: Kenya National Bureau of Statistics; East African Tea Trade Association 
Figure 13(g): Monthly Kenya tea auction prices (Ksh/Kg) 
360.0
340.0
320.0
300.0
280.0
260.0
240.0
220.0
200.0
180.0
2020 2021 2022 2023
 
Data Source: Kenya National Bureau of Statistics; East Africa Tea Trade Association; 
Mombasa Tea Auction 
  
13 
 
Prices in Ksh./Kg
January
February
March
April
May
June
July
August
September
October
November
December
 
 
 
Figure 14: The exchange rate of Kenya shilling to global currencies 
 200.0000
 114.00
 112.00
 180.0000  110.00
 108.00
 106.00
 160.0000  104.00
 102.00
 100.00
 140.0000  98.00
 96.00
 94.00
 120.0000
 92.00
 90.00
 100.0000  88.00
 86.00
 84.00
 80.0000  82.00
US Dollar Index KES/USD KES/STG-POUND KES/EURO
 
Data source: Central Bank of Kenya; Kenya National Bureau of Statistics; 
https://www.investing.com/quotes/us-dollar-index-historical-data 
Figure 15: The exchange rate of Kenya shilling to regional currencies 
 0.140  9.000
 0.120  8.000
 7.000
 0.100
 6.000
 0.080  5.000
 0.060  4.000
 3.000
 0.040
 2.000
 0.020  1.000
 -  -
USHS/KES TSHS/KES RWF/KES BIF/KES KES/SA RAND
 
Data source: Central Bank of Kenya 
  
14 
 
Units of KES for 1 USD, STG Pound, Euro
02-Jan-20
12-Feb-20
23-Mar-20
05-May-20
16-Jun-20 01-Jan-2002-Feb-20
24-Jul-20 05-Mar-20
03-Sep-20 06-Apr-20
13-Oct-20 08-May-2009-Jun-20
23 Nov 2020 11-Jul-20
4 Jan 2021 12-Aug-20
11 Feb 2021 13-Sep-2015-Oct-20
23 Mar 2021 16-Nov-20
4 May 2021 18-Dec-20
15 Jun 2021 19-Jan-2120-Feb-21
26 Jul 2021 24-Mar-21
2 Sep 2021 25-Apr-21
13 Oct 2021 27-May-2128-Jun-21
23 Nov 2021 30-Jul-21
4 Jan 2022 31-Aug-21
11 Feb 2022 02-Oct-2103-Nov-21
23 Mar 2022 05-Dec-21
9 May 2022 06-Jan-22
17 Jun 2022 07-Feb-2211-Mar-22
28 Jul 2022 12-Apr-22
7 Sep 2022 14-May-22
18-Oct-22 15-Jun-2217-Jul-22
25-Nov-22 18-Aug-22
6 Jan 2023 19-Sep-22
15 Feb 2023 21-Oct-2222-Nov-22
27 Mar 2023 24-Dec-22
10-May-23 25-Jan-23
20-Jun-23 26-Feb-23
30-Mar-23
31-Jul-23 01-May-23
07-Sep-23 02-Jun-23
04-Jul-23
05-Aug-23
06-Sep-23
US Dollar index
 
 
 
Figure 16: Performance of select currencies against the US dollar 
40.0%
30.0%
20.0%
10.0%
0.0%
USD/KES USD/UGX USD/TZS USD/RWF USD/BIF USD/S.A Rand
-10.0%
-20.0%
Sep 2018- Sep 2019- Sep 2020- Sep 2021- Sep 2022-
Sep 2019 (%)  Sep 2020 (%) Sep 2021 (%) Sep 2022(%) Sep 2023(%)
 
Data source: Country Statistics Offices; https://www.investing.com.  per centage 
change in currencies against the US Dollar measured as end of period changes 
Figure 17: Months of import cover and diaspora remittances 
400.0 7.0
350.0 6.0
300.0
5.0
250.0
4.0
200.0
3.0
150.0
2.0
100.0
50.0 1.0
0.0 0.0
Diaspora Remittances (USD '000,00) Months of Import cover
Data Source: Central Bank of Kenya 
  
15 
 
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23
 
 
 
3. MONETARY AND FINANCIAL SECTOR 
The Central Bank of Kenya (CBK) maintained the policy rate, the Central Bank Rate 
(CBR) in September 2023 at 10.50 per cent. A similar pattern was witnessed by Central 
banks within the East African region, which increased their central bank rates during the 
July-August quarter with Uganda and Rwanda increasing their rates to 9.5 per cent and 
7.5 per cent, respectively. Tanzania, however, maintained its central bank rate at 5 per 
cent over the same quarter.  
Lending rate increased from 12.4 per cent in July 2022 to 13.5 per cent in July 2023. The 
weighted average Treasury Bills interest rate for the 91-day, 182-day, and 364-day rose 
from an average of 8.6, 9.5, and 9.9 per cent in August 2022 to an average of 13.3, 13.2, 
and 13.6 per cent in August 2023. The average Treasury bill rates for the 91-day, 182-
day, and 364-day periods were 10.8, 11.1, and 11.5 per cent, respectively, for the year 
2023, compared to an average of 7.7, 8.6, and 9.8 per cent for the same periods in 2022.  
The banking sector's total credit expanded, increasing from Ksh 5.3 trillion in July 2022 
to Ksh 6.0 trillion in July 2023. Private sector credit growth rate was 10.3 per cent in July 
2023, lower than the 14.2 per cent in the same month the previous year. Year on year 
analysis points at an increase in the proportion of total credit allocated to the 
manufacturing sector from 9.4 per cent in July to 9.6 in July 2023. Month on month 
analysis, however, points at a decrease by 4.2 per cent from 10.0 per cent in June. The 
proportion of total credit to the public sector grew from 37.6 per cent in July 2022 to 
38.8 per cent in July 2023.  
The banking sector's return on assets was at 2.0 per cent in July 2023, a decrease from 
2.2 per cent in July 2022. Although this also points at a steady growth in the sector’s 
performance from 0.3 per cent in January 2023, the sector’s liquidity declined from 51.6 
per cent in July 2022 to 49.7 per cent in July 2023. The ratio of non-performing loans to 
gross loans rose slightly from 14.4 per cent in July 2022 to 14.8 per cent July 2023. The 
liquidity of the banking sector is crucial as it maintains stability in the financial system 
and supports economic growth. 
Figure 18a: Repos and reverse repo interbank rates 
14
12
10
8
6
4
2
Reverse Repos Repo (7-days) % Interbank %
Data source: Central Bank of Kenya 
16 
 
Repos and Reverse Repo Rates (%)
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23
Sep-23
 
 
 
Figure 18b: Commercial bank rates and Central Bank rate 
9.2 16.0
8.4 14.0
7.6
12.0
6.8
10.0
6.0
8.0
5.2
6.0
4.4
4.0
3.6
2.8 2.0
2.0 0.0
Deposit Rate Savings Rate Lending Rate Central Bank Rate
 
Data source: Central Bank of Kenya 
  
17 
 
Deposit and Saving rates (%)
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Lending rates (%)
 
 
 
Figure 19: Monetary policy stance for selected countries in Africa 
32.0
30.0
28.0
26.0
24.0
22.0
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
Kenya Uganda Tanzania Rwanda Ghana
Nigeria Zambia S. Africa Series9
 
Data Source: Country Central Banks 
Figure 20: Treasury bill weighted average rate (%) 
 14.00
 13.00
 12.00
 11.00
 10.00
 9.00
 8.00
 7.00
 6.00
 5.00
91-Day 182-Day 364-Day
 
Data source: Central Bank of Kenya 
18 
 
Weighted Average Interest Rate (%)
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23
Sep-23
 
 
 
Figure 21: Banking sector credit 
40.0
14.2
36.0
13.1
32.0
12.0
28.0 10.9
24.0 9.8
20.0 8.7
7.6
16.0
6.5
12.0
5.4
8.0
4.3
4.0 3.2
0.0 2.1
Private Sector Credit Growth (%)
Credit to Public Sector Proportion of Total Banking sector credit (%)
Manufacturing sector credit proportion of Banking sector credit (%)
 
Data Source: Central Bank of Kenya 
  
19 
 
Public and manufacturign sector proportion of Banking sector 
credit (%)
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Private Sector Credit Growth (%)
 
 
 
Figure 22: Mobile money transactions 
 250.0  740.0
 690.0
 200.0  640.0
 590.0
 150.0
 540.0
 490.0
 100.0
 440.0
 50.0  390.0
 340.0
 -  290.0
Mobile Money Subscriptions (Millions) Number of Transactions (Millions)
Value of Transactions (KSh Billion)
 
Data source: Kenya National Bureau of Statistics 
Figure 23: Kenya banking sector performance  
Figure 23(a): Return on asset (%) 
 4.00
 3.50
 3.00
 2.50
 2.00
 1.50
 1.00
 0.50
 -
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2020 2021 2022 2023
Data Source: Calculated using data from Central Bank of Kenya 
  
20 
 
Return on Assets (%) Subscriptions & No. Transactions (millions)
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Value of Transactions (Billions)
 
 
 
Figure 23(b): Liquidity ratio and ratio of gross Non-Performing Loans 
(NPLs) to gross loans 
15.0 60
14.7
58
14.4
14.1 56
13.8
54
13.5
52
13.2
12.9 50
12.6
48
12.3
12.0 46
Ratio of Gross NPL/Gross loans Liquidity Ratio (%)
 
Data Source: Calculated using data from Central Bank of Kenya 
  
21 
 
Ratio of Gross NPL/Gross loans(%)
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23
Sep-23
Liquidity Ratio (%)
 
 
 
4. FISCAL PERFORMANCE 
Total revenue collection for 2022/2023 was Ksh 2,360.5 billion against a target of Ksh 
2,478.6 billion, a below-target performance attributed to shortfalls in appropriations -
in-aid (A.I.A) and ordinary revenue collection. The revenue collected, however, increased 
by about 7 per cent compared to Ksh 2,199.8 billion collected in 2021/2022. Actual 
government expenditure for 2022/23 summed up to Ksh 3,218.2 billion, with 
development expenditure accounting for about 22 per cent. Exchequer issues to the 
National government and County governments amounted to Ksh 3,242.8 billion and 
399.6 billion, respectively, implying total allocation to counties and a 0.1 per cent 
shortfall in allocation to the National government. 
The stock of public and public guaranteed debt as of April 2023 was Ksh 9,634.9 billion, 
with domestic debt accounting for 47.1 per cent. The share of Treasury bonds in domestic 
debt declined from 82.9 per cent in April-June 2022 to 78.3 per cent in April-June 2023. 
Banking institutions continue to hold the highest share of domestic debt at 45.7 per cent 
despite the declining trend in their share over time. The share of pensions fund has been 
increasing from 30.5, 32.0 to 33.8 per cent for the same periods in 2021, 2022 and 2023, 
respectively.  
The external debt is composed of bilateral, multilateral, commercial banks, and export 
credit in proportions of 25.5, 48.5, 25.8 and 0.3 per cent, respectively, for the 2nd quarter 
of 2023. Kenya is pursuing more concessional loans due to their favourable below-
market interest rates and long grace periods in a bid to reduce exposure to expensive 
commercial loans. As a result, the share of commercial loans has been reducing over 
time. For instance, commercial loan reduced from a share of 29.2 per cent in April-June 
2021 to 27.9 per cent in April-June 2022, and further to 25.8 per cent in April-June 2023, 
while the share of multilateral debt increased from 40.7 per cent to 44.5 per cent and 
further to 48.5 per cent over the same periods. 
Figure 24: National revenue (Ksh billion) 
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2019/2020 Actual revenue 2020/2021 Actual revenue 2021/22 Actual revenue
2022/23 Actual revenue 2019/2020 Target revenue 2020/2021 Target revenue
2021/22 Target revenue 2022/23 Target revenue
 
Data Source: Monthly Gazette Notices, The National Treasury and Planning Quarterly 
Economic and Budget Review 
  
22 
 
Revenue (Ksh billions)
July
August
September
October
November
December
January
February
March
April
May
June
 
 
 
Figure 25: Composition of government revenue (Ksh billion) 
 700,000
 600,000
 500,000
 400,000
 300,000
 200,000
 100,000
 -
Tax Revenue Other Revenue Total grants Total Revenue
 
Data Source: Calculated using data from the Central Bank of Kenya and The National 
Treasury data published on monthly Kenya Gazette Notices 
Figure 26: Growth in tax revenue (%) and quarterly GDP growth (%) 
 34.0
 29.0
27.4 
 24.0 24.4 23.7 
 19.0
14.6 
 14.0 11.0 
9.3 
 9.0 7.4 6.8 
4.4 5.2 
 4.0 4.7 2.3 
0.9 
-1.0
-9.8 
-6.0 -4.1 -3.5 -12.9 
-11.0
-16.0
Q1-2019 - Q2-2019 - Q3-2019- Q4-2019- Q2-2020- Q3-2020- Q4-2020- Q1-2021- Q2-2021-
 Q1-2020  Q2-2020 Q3-2020 Q4-2020 Q2-2021 Q3-2021 Q4-2021 Q1-2022 Q2-2022
Nominal Quarterly GDP Growth Nominal Tax Revenue Growth
 
Data Source: Kenya National Bureau of Statistics and Central Bank of Kenya 
  
23 
 
Growth in Tax Revenue and Quarterly GDP 
(%)
 
 
 
Figure 27: Exchequer issues to National government (Ksh billion) 
 3,500.00
 3,000.00
 2,500.00
 2,000.00
 1,500.00
 1,000.00
 500.00
 -
Actual  2020/2021 Actual  2021/2022 Actual  2022/2023
Target  2020/2021 Target  2021/2022 Target  2022/2023
 
Data Source: Monthly Gazette Notices, The National Treasury and Planning 
Figure 28: Exchequer issues to county governments (Ksh billion) 
400
350
300
250
200
150
100
50
0
Actual 2020/2021 Actual 2021/2022 Actual 2022/2023
Target 2020/2021 Target 2021/2022 Target 2022/2023
 
Data Source: Monthly Gazette Notices, The National Treasury and Planning 
  
24 
 
Exchequer issues to County governments Target and Actual  issues to National Government 
(Kshs. Billions (Kshs. Billions
 
 
 
Figure 29: Exchequer balance as a percentage of actual revenue (%) 
42.0
40.0
38.0
36.0
34.0
32.0
30.0
28.0
26.0
24.0
22.0
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2020/2021 2021/22 2022/23
 
Data Source: Monthly Gazette Notices, The National Treasury and Planning Quarterly 
Economic and Budget Review 
  
25 
 
 
 
 
Figure 30: Fiscal deficit (Ksh billion) 
200
0
July Aug Sept Oct Nov Dec Jan Feb Mar April May June
-200
-400
-600
-800
-1000
Fiscal Deficit 2019/20 Fiscal Deficit 2020/21 Fiscal Deficit 2021/22 Fiscal Deficit 2022/23
 
Data Source: Calculated using data from Central Bank of Kenya and The National 
Treasury data published on monthly Kenya Gazette Notice  
Figure 31: Total debt (Ksh billion) and proportionate shares of domestic and 
foreign debt 
32.0
28.0
24.0
20.0
16.0
12.0
8.0
4.0
0.0
Recurrent Exchequer Issues as a % of total Issues to MDAs
Development Exchequer Issues as a % of total Issues to MDAs
 
Data Source: Calculated using data from the Gazette Notices, Quarterly Economic and 
Budget Review and Central Bank of Kenya Monthly Economic Indicators 
26 
 
Recurrent & Development Issues (%) to 
Health Sector
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
 
 
 
Figure 32: Composition of government domestic debt by instrument (%) 
100.0
90.0
80.0
70.0
60.0 77.478.078.579.079.780.180.881.081.982.683.083.383.283.183.082.682.982.983.283.183.083.283.7 85.1
50.0 70.0
40.0
30.0
20.0
10.0 20.319.819.618.918.217.817.217.1 16.115.415.014.514.815.015.315.315.315.214.914.714.814.614.113.412.8
0.0
Treasury Bills (excluding Repos) Treasury Bonds CBK Overdraft to Govt Other domestic debt
Data Source: Calculated using data from the Central Bank of Kenya  
Figure 33: Composition of government domestic debt by holder (%) 
105.0
5.9 6.0 6.1 6.0 6.1 6.1 6.1 6.2 6.4 6.4 6.3 6.3 6.0 6.0 6.2 6.3 6.3 6.4 6.5 6.7 6.8 7.1 7.0 6.8 7.2
85.0
30.931.031.131.331.531.431.331.631.831.832.032.332.532.532.432.632.833.133.433.133.333.533.833.933.6
65.0
5.4 5.3 5.4 5.4 5.5 5.5 5.6 5.9 5.7 5.7 5.8 5.8 5.9 6.1 6.1 6.2 6.2 6.1
6.7 6.7 6.0 6.06.6 6.6 6.06.7 6.7 6.8 6.1 6.2 6.1 6.06.9 6.8 6.9 7.0 7.1 7.2 7.2 7.2 7.3 7.4 7.4 7.4 7.4 7.4 7.5 7.5 7.5 7.3
45.0
25.0 51.051.050.750.650.250.250.249.649.249.248.848.548.448.248.047.747.347.146.746.846.545.845.545.745.9
5.0
-15.0
Banking Institutions Insurance Companies Parastatals Pension Funds Other investors
Data Source: Calculated using data from the Central Bank of Kenya  
27 
 
01/07/2021
01/08/2021
01/07/2021
01/09/2021
01/08/2021
01/10/2021
01/09/2021
01/11/2021
01/10/2021
01/12/2021
01/11/2021
01/01/2022
01/12/2021
01/02/2022
01/01/2022
01/03/2022
01/02/2022
01/04/2022
01/03/2022
01/05/2022
01/04/2022
01/06/2022
01/05/2022 01/07/2022
01/06/2022 01/08/2022
01/07/2022 01/09/2022
01/08/2022 01/10/2022
01/09/2022 01/11/2022
01/10/2022 01/12/2022
01/11/2022 01/01/2023
01/12/2022 01/02/2023
01/01/2023 01/03/2023
01/02/2023 01/04/2023
01/03/2023 01/05/2023
01/04/2023 01/06/2023
01/05/2023 01/07/2023
01/06/2023
01/07/2023
 
 
 
Figure 34: Composition of external debt: Proportionate shares of bilateral, 
multilateral, commercial bank, and export credit (%) 
100.00
90.00
80.00
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
Bilateral Multilateral Commercial Banks Export Credit
Data Source: Calculated using data from the Central bank of Kenya 
  
28 
 
32.65 33.00 33.81
33.04 33.00 33.42
30.01 38.80 30.70
30.40 39.42 29.84
30.40 39.67 29.46
29.62 40.70 29.21
28.30 41.84 29.56
28.22 42.23 29.25
27.83 43.17 28.70
27.34 44.49 27.88
26.66 45.31 27.75
26.23 46.13 27.36
26.29 46.72 26.71
25.45 48.46 25.82
 
 
 
5. CAPITAL MARKETS 
The capital market in Kenya is yet to regain its growth from numerous shocks. For 
instance, the NSE20 share index decreased from 1717.68 points at the end of Q3 2022 to 
1508.75 points at the end of Q3 2023. The volume of bonds traded on the NSE declined 
from Ksh 61.6 billion in January 2023 to Ksh 31.3 billion in June 2023 despite 
rebounding to Ksh 70.5 billion and Ksh 68 billion in the months of March and May 2023, 
respectively. This decreasing trend in overall bond volumes traded is confirmed by a 
lower volume of Ksh 52 billion in the 2nd quarter of 2023 compared to Ksh 59.7 billion in 
the 1st quarter of the same year. The cumulative bond volume traded during April-June 
2023 was lower at Ksh 138.0 billion compared to Ksh 193.7 billion during April-June 
2022.  
The foreign investors activity at the Nairobi Securities Exchange assumed a net selling 
position throughout the quarter, with foreign sales of Ksh 2.1 billion, Ksh 3.5 billion, Ksh 
1.6 billion and Ksh 5.2 billion against foreign purchases of Ksh 1.9 billion, Ksh 2.2 billion 
Ksh 1.7 billion and Ksh 2.2 billion in April, May, June, and July 2023, respectively. 
Average foreign participation to equity declined continuously in the 2nd quarter from 47.3 
per cent in April through 47.11 per cent in May and 40.45 per cent in June 2023 and 
rebounded to 48.23 per cent in July 2023. Foreign investors' trading activity is crucial 
for Kenya's capital markets as it helps boost liquidity and provide a source of external 
financing.  
The capital market performance in the regional and international markets recorded 
mixed results over the quarter. The US Capital markets performance improved in the 3rd 
quarter of 2023 as reflected by the Nasdaq 100, Dow Jones Industrial Average (DIJA) 
and NYSE Composite index. For the Asian capital markets, Nikkei 225 improved while 
Shanghai Composite and SZSE Composite Index declined in the quarter ending 
September 20223. The EGX30 improved up to 18881 points in the 3rd quarter of 2023, 
from 16,622 points in 1st quarter 2023 to 16,622 points in 2nd quarter of 2023. 
  
29 
 
 
 
 
Figure 35: Bond volumes traded (Ksh million) and FTSE NSE Kenya 
government bond price Index 
99 140000
98.5
120000
98
100000
97.5
97 80000
96.5 60000
96
40000
95.5
20000
95
94.5 0
FTSE NSE Govt Bond Price Index Bond Volumes Traded (KSh. Million)
 
Data Source: Nairobi Securities Exchange; Central Bank of Kenya Monthly Economic 
Indicators 
Figure 36: The 10-year Kenya Eurobond (2024) yield (%) 
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
 
Data Source: Central Bank of Kenya Monthly Economic Indicators 
  
30 
 
FTSE NSE Govt Bond Price Index
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Bond Volume Traded (Ksh Millions)
 
 
 
Figure 37: Stock market performance 
3000
2800
2600
2400
2200
2000
1800
1600
1400
NSE20 Index  Mkt Cap (KSh Bn)
 
Data Source: Nairobi Securities Exchange 
Figure 38: Stock value turnover ratio (%) 
0.20
0.18
0.16
0.14
0.12
0.10
0.08
0.06
0.04
0.02
0.00
 
Data Source: Nairobi Securities Exchange; Calculated as equity turnover value (Ksh 
million)/ Market capitalization (Ksh million) 
  
31 
 
01-Jan-20
05-Feb-20 01-Jan-20
11-Mar-20 09-Feb-20
15-Apr-20 19-Mar-20
20-May-20 27-Apr-20
24-Jun-20 05-Jun-20
29-Jul-20 14-Jul-20
02-Sep-20 22-Aug-20
07-Oct-20 30-Sep-20
11-Nov-20 08-Nov-20
16-Dec-20 17-Dec-20
20-Jan-21 25-Jan-21
24-Feb-21 05-Mar-21
31-Mar-21 13-Apr-21
05-May-21 22-May-21
09-Jun-21 30-Jun-21
14-Jul-21 08-Aug-21
18-Aug-21 16-Sep-21
22-Sep-21 25-Oct-21
27-Oct-21 03-Dec-21
01-Dec-21 11-Jan-22
05-Jan-22
09-Feb-22 19-Feb-22
16-Mar-22 30-Mar-22
20-Apr-22 08-May-22
25-May-22 16-Jun-22
29-Jun-22 25-Jul-22
03-Aug-22 02-Sep-22
07-Sep-22 11-Oct-22
12-Oct-22 19-Nov-22
16-Nov-22 28-Dec-22
21-Dec-22 05-Feb-23
25-Jan-23 16-Mar-23
01-Mar-23 24-Apr-23
05-Apr-23 02-Jun-23
10-May-23 11-Jul-23
14-Jun-23 19-Aug-23
19-Jul-23 27-Sep-23
 
 
 
Figure 39: Foreign trading in the stock market 
 140.0
 31,500.0
 120.0
 26,500.0  100.0
 21,500.0  80.0
 16,500.0  60.0
 11,500.0  40.0
 6,500.0  20.0
 1,500.0  -
Average Foreign Participation to Equity Turnover (%)
Foreign Purchases (FP)
Foreign Sales (FS)
Equity Market Turnover (ET)  
Data Source: Central Bank of Kenya; Sterling Capital Ltd 
(https://www.sterlingib.com)  
  
32 
 
Foreign Purchases and Sales, Equity Turnover 
(Ksh) million
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Average Foreign Participation to Equity Turnover 
(%)
 
 
 
Figure 40: Stock market performance of selected advanced and emerging 
markets  
(a) USA stock markets 
18,000 37,000
35,000
16,000
33,000
14,000
31,000
12,000 29,000
27,000
10,000
25,000
8,000
23,000
6,000 21,000
NYSE Composite Nasdaq 100 Index (NDX) Dow Jones Industrial Average (DJIA)
 
Data source: Country Stock Exchanges; http://www.investing.com 
(b) European stock markets  
9,000
1,380
8,600
1,327
8,200 1,274
7,800 1,221
7,400 1,168
7,000 1,115
6,600 1,062
6,200 1,009
5,800 956
5,400 903
5,000 850
London Stock Exchange Group PLC (LSE) (FTSE 100)7,439.13
EuroNext 100 (N100)
 
Data source: Country Stock Exchanges; http://www.investing.com  
  
33 
 
London Stock Exchange NYSE Composite & Nasda 100
Jan-20
Feb-20 Jan-20
Mar-20
Apr-20 Mar-20
May-20
Jun-20 May-20
Jul-20
Aug-20 Jul-20
Sep-20
Oct-20 Sep-20
Nov-20 Nov-20
Dec-20
Jan-21 Jan-21
Feb-21
Mar-21 Mar-21
Apr-21
May-21 May-21
Jun-21
Jul-21 Jul-21
Aug-21
Sep-21 Sep-21
Oct-21
Nov-21 Nov-21
Dec-21
Jan-22 Jan-22
Feb-22
Mar-22 Mar-22
Apr-22
May-22 May-22
Jun-22
Jul-22 Jul-22
Aug-22
Sep-22 Sep-22
Oct-22
Nov-22 Nov-22
Dec-22
Jan-23 Jan-23
Feb-23
Mar-23 Mar-23
Apr-23
May-23 May-23
Jun-23
Jul-23 Jul-23
Aug-23
Sep-23
Dow Jones Industrial Average
EuroNext 100
 
 
 
c) Asian stock markets 
3,950 34,200
3,675 33,000
31,800
3,400 30,600
3,125 29,400
2,850 28,200
27,000
2,575
25,800
2,300 24,600
2,025 23,400
1,750 22,200
21,000
1,475 19,800
1,200 18,600
Shanghai Composite (SSEC) SZSE Composite Index (SZSC) Nikkei 225 (N225)
 
Data source: Country Stock Exchanges; http://www.investing.com 
(d): African stock markets 
21,800
4,700 21,000
4,350 20,200
4,000 19,400
18,600
3,650 17,800
3,300 17,000
2,950 16,200
2,600 15,400
14,600
2,250 13,800
1,900 13,000
1,550 12,200
11,400
1,200
10,600
850 9,800
500 9,000
FTSE South Africa (FTWIZAFL) NSE20 (Kenya) NGSE30 (Nigeria) EGX30 (Egypt)
 
Data source: Country Stock Exchanges; http://www.investing.com 
  
34 
 
FTWIZAFL, NGSE30 &NSE20 indices
SSCE & SZSC
Jan-20
Feb-20 Jan-20
Mar-20 Feb-20
Apr-20 Mar-20
May-20 Apr-20
Jun-20 May-20
Jul-20 Jun-20
Aug-20 Jul-20
Sep-20 Aug-20
Oct-20 Sep-20
Nov-20 Oct-20
Dec-20 Nov-20
Jan-21 Dec-20
Feb-21 Jan-21
Mar-21 Feb-21
Apr-21 Mar-21
May-21 Apr-21
Jun-21 May-21
Jul-21 Jun-21
Aug-21 Jul-21
Sep-21 Aug-21
Oct-21 Sep-21
Nov-21 Oct-21
Dec-21 Nov-21
Jan-22 Dec-21Jan-22
Feb-22
Mar-22 Feb-22Mar-22
Apr-22 Apr-22
May-22 May-22
Jun-22 Jun-22
Jul-22 Jul-22
Aug-22 Aug-22
Sep-22 Sep-22
Oct-22 Oct-22
Nov-22 Nov-22
Dec-22 Dec-22
Jan-23 Jan-23
Feb-23 Feb-23
Mar-23 Mar-23
Apr-23 Apr-23
May-23 May-23
Jun-23 Jun-23
Jul-23 Jul-23
Aug-23 Aug-23
Sep-23 Sep-23
EGX30 index Nikkei 225
 
 
 
6. RISK-RELATED FACTORS 
Business activities in the economy have faced great challenges, with contraction 
evidenced by the decline in the Purchasing Managers Index (PMI) to a quarterly average 
of about 48.0 per cent in the third quarter of 2023 from a relatively higher PMI index of 
50.6 per cent in August 2023. The PMI readings for the 1st and 2nd quarters, respectively, 
were 49.3 and 48.1 per cent. A PMI reading of more than 50 indicates an improvement 
in business conditions from the previous month, while a reading below 50 signifies a 
deterioration. The decline in the PMI has been attributed to persistent contraction in the 
private sector, which is worsened by inflationary pressures, difficulties in accessing US 
dollars, and a deterioration in the exchange rate. These factors have collectively 
contributed to the difficult business environment experienced during the last two 
months of the quarter.  
Rainfall in the March-May and June-August seasons of 2023 has been relatively high, 
with both seasons recording a total of 338.9mm and 266.4mm of rainfall, respectively, 
compared to the same seasons in the year 2022 where March-May and June-August 
rainfall was recorded at 298.2mm and 222.3, respectively. The rainfall distribution in 
both time and space over the western sector was generally poor, with prolonged dry spells 
especially over the Lake Victoria Basin, Central, Rift Valley and parts of the South Rift 
Valley. The highest seasonal rainfall total of 387.7 mm (92.1% of June-July-August LTM) 
was in Kitale Meteorological Station followed by Kakamega Station with 375.9mm 
(70.3%). Other stations that recorded significant amounts of rainfall include Eldoret 
(338.4mm), Kisii (329.8mm), Kericho (309.5mm), Mtwapa (273.4mm), Lamu 
(242mm), Msabaha (222.6mm), Nyahururu (221mm) and Malindi (218.2mm). All the 
other stations recorded less than 200 mm of rainfall with Lodwar, Mandera and Makindu 
recording no rainfall at all throughout the season. 
In July 2023, Fitch Ratings downgraded the outlook for Kenya from B to B- from B 
reflecting an increase in external financing constraints. In addition, debt thresholds by 
IMF were surpassed with present value of external debt in  per cent of exports, external 
debt service in  per cent of revenue, external debt service in  per cent of exports and 
present value of total public debt in  per cent of GDP being recorded at 347, 315, 21 and 
68 per cent, respectively, in 2023 compared to their respective thresholds of 180, 18, 15 
and 55, respectively, As part of financing the Bottom-up Economic Transformation 
Agenda (BETA), the government plans to diversify financing sources that include the 
commercial loans, mainly to support the repayment of external debt including the 10-
year Eurobond maturing in June 2024. 
  
35 
 
 
 
 
Figure 41: Kenya purchasing managers’ index 
60.0
58.0
56.0
54.0
52.0
50.0
48.0
46.0
44.0
42.0
40.0
38.0
36.0
34.0
Kenya PMI Index
 
Data Source: Stanbic Bank (https://www.stanbicbank.co.ke); IHS-Markit 
(https://ihsmarkit.com) Key: 50.0 = Neutral; Above 50.0 = Expansion; Below 50.0 = 
Contraction 
Figure 42: Mean annual and seasonal rainfall (millimeters) 
1200
1000
800
600
400
200
0
March-May June-August October-December Annual
2020 2021 2022 2023
 
Data Source: Kenya Meteorological Department Monthly Weather Forecast 
  
36 
 
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
 
 
 
Table 43: JA 2023 rainfall totals against JJA LTM 
Source: Kenya Meteorological Department 
Figure 44: Average monthly temperature (Nairobi) 
40
30
20
10
0
Average of Nairobi Minimum Temperature (°C)
Average of Nairobi Maximum Temperature (°C)
 
https://www.visualcrossing.com/weather/weather-data-services/nairobi?v=api  
  
37 
 
 
 
 
Table 1: Fitch rating for Kenya 
Current Rating  Prior Rating  
Type 
(as of 20 July 2023) (as of 22 March 2022) 
  Rating  Outlook Action Rating Outlook Action 
LTR (Long term  
Issuer  B Negative Affirmed B+ Negative Affirmed 
default rating)  
STR (Short-term 
Issuer default B   Affirmed B   Affirmed 
rating) 
Local Currency 
Short Term Issuer B   Affirmed B   Affirmed 
Default Rating 
Country Ceiling B   Affirmed B+   Affirmed 
Local Currency 
Long Term Issuer B Negative Affirmed B+ Negative Affirmed 
Default Rating 
Data source: https://www.fitchratings.com/entity/kenya-86485911#ratings 
Table 2: Some Eastern Africa countries IMF debt thresholds 
Country Date Debt Present Present External External Present 
of carrying value of value of debt service debt service value of 
Public capacity external external in per cent in per cent total public 
ation debt in debt in per of Revenue of Exports debt in per 
per cent of cent of cent of GDP 
GDP Exports  
Thr Act Thres Act Thres Act Thres Act Thres Act
esh ual hold ual hold ual hold ual hold ual 
old 
Burundi Jul-22 Weak 30 17 140 226 14 0 10 0 35 68 
Djibouti May-20 Medium 40 72 180 61 18 15 15 1 55 41 
Ethiopia Apr-20 Medium 40 28 180 316 18 315 15 21 55 46 
Kenya Dec- Medium 40 32 180 347 18 315 15 21 55 68 
22 
Rwanda Dec-22 Strong 55 50 240 423 23 798 21 38 70 64 
Somalia Jun-22 Weak 30 39 140 478 14 0 10 0 35 0 
Sudan Jun-21 Weak 30 44 140 368 14 500 10 50 35 128 
Tanzania Jul-22 Medium 40 27 180 285 18 300 15 20 55 42 
Uganda Mar-22 Medium 40 28 180 312 18 180 15 12 55 51 
Data source: IMF Country Debt Thresholds 
38 
 
About the KIPPRA Quarterly Market Analysis Report
The KIPPRA quarterly market analysis report is one of the Institute’s policy 
intelligence publications that focuses on reviewing trends in performance 
in the real sector (gross domestic product, price movements, production, 
consumption); international markets (commodity markets, exchange rates, 
remittances); money market (interbank, treasury securities, banking sector 
performance, monetary policy); fiscal performance; capital markets; and 
risk related factors in Kenya’s economy and selected global markets in 
each quarter, with a view to identifying policy-related dimensions.
Kenya Institute for Public Policy Research and Analysis
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P.O. Box 56445-00200, Nairobi
Tel: 2719933/4; Cell: 0736712724, 0724256078
Email: admin@kippra.or.ke
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