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Jijenge Credit shrugs off inflation jitters as loan demand rise – The Star Kenya

Microlender Jijenge Credit ltd has cast optimism on a growing investor confidence, shrugging off mounting jitters over the economic fallout from the Russia-Ukraine war and the presidential court petition.
According to the firm’s CEO, Peter Macharia, a growing number of small businesses remain hopeful about their financial future survival even as inflation and fears of recession weigh on their continuity.
“Since the month of July, we have noticed an increased number of inquiries notwithstanding the current economic stress and stretched electioneering period. This is strong evidence that consumers are weathering this excess of challenges,” Macharia said in an interview.
Inflationary concerns have been dominating the airwaves recently, rising to a fever pitch in July when the overall inflation rate reached 8.3 per cent.
It is hard to miss its impact in recent economic numbers, and now a growing number of SMEs are pressed to the wall.
“You have seen it at the petrol stations, in food prices, or in the housing and real estate market, and for those who follow activities at the Nairobi Stocks Exchange (NSE), you definitely hear about it in the lips of billionaires’ investor talking points. But with the rising level of appetite for business loans, we anticipate a brighter future especially once the Court petition is fully determined,” Macharia says.
The country’s annual inflation rate has been rising on account of many macroeconomic factors including the Covid-19 pandemic but has intensified due to the ongoing global war between aforementioned countries.
The ensuing effect of rising inflation, which is a general increase in the prices of goods and services in an economy, has led to a slow growth in consumer spending among Kenyans and businesses generally.
Figures by the Kenya National Bureau of Statistics (KNBS) show that the Consumer Price Index (CPI) in the country rose to 125.05 points in July from 124.22 points the previous month.
Inflation has affected growth in real income, thereby curtailing consumers’ purchasing power. 
While nominal earnings continue to rise due to labour market tightening, real earnings have been on a broad downward trend since last year and more particularly since the Russia-Ukraine war started.
While there are concerns that the Central Bank of Kenya (CBK) could further raise base lending rate by a further 50 basis points on Thursday, September 29, when the next meeting of the Monetary Policy Committee (MPC) is expected to be held, Macharia believes borrowing by SMEs will still carry on.
“We at Fitch Solutions retain our view that CBK will hike its policy rate by a further 50 basis points (bps) to 8.00 per cent by end of 2022, after a 50 bps hike in May 2022,” Fitch Solutions says in its latest assessment.
This has spared consumers any increases in the cost of loans after the bank regulator sent its signal to banks to hold interest rates steady.
The benchmark rate held by MPC was in May raised to 7.50 per cent saying the current monetary policy stance had protected the shilling and reduced the threat of money-driven inflation.
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.