Lending rates are the biggest cause of unhappiness amongst Kenyans, according to the Hanke (by Economist Steve Hanke) Annual Misery Index (HAMI) 2022.
While the country is reeling from unprecedented economic pressure, with inflation hitting a high of 9.59% in October 2022, runaway lending rates are what cause Kenyans the most misery.
In 2022, a majority of banks saw their overall lending rates increase as the government increased the benchmark rate for the first time in about seven years from 7% to 7.5%. for instance, according to data from the Central Bank of Kenya, popular banks such as Equity, KCB and Absa, all recorded an increase in their lending rates in 2022.
KCB bank, the largest bank in terms of assets as of March 2023, recorded a slight increase in its average lending rate from 12.1% as at December 2021 to 12.3% as at March 2023. Equity bank, Kenya’s most profitable lender, saw its average rate increase from 12.6% to 14.1% while Absa recorded 12% in December 2021 and 14.2% as at March 2023. These increases tend to bring in huge returns for the commercial banks but make it quite unaffordable for customers.
Credit bank recorded the highest increase, soaring from 12.7% as at December 2021 to 17.6% as at March 2023, while First Community Bank, remained the same in the period and holds the lowest rate of 9% among all 39 banks. As CBK has continued to increase the benchmark rate, currently at 9.5%, commercial banks are expected to continue increasing the rates, which will mean Kenyan have to pay more to have access to credit.
Meanwhile, Zimbabwe was ranked as the world’s most unhappy place, out of 151 countries, with a misery index of 414.7 compared to the 2021 index where it was ranked 5th.
The Hanke survey attributes the country’s hyperinflation as the major contributing factor. Since the era of the late Robert Gabriel Mugabe, the country has witnessed endemic inflation. Recently, the country’s annual inflation rate has hit 243% while unemployment is at an alarming rate of 20%. Lending rates in the country are also at an all-time high hitting 131.8%.
Despite only two African countries making up the top ten of index, Zimbabwe and Sudan, African countries make up two fifth of the top 50. And a majority of them, have inflation as the major contributing factor. This is as a result of 2022 being a year of brutal inflation, as throughout the world just about every country, grappled with soaring prices. The least miserable country in the index was Switzerland which had a misery index of 8.52.
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