How CBK's bold moves can help unlock our economy's potential

As an ecopreneur for over 30 years, I have come to appreciate that understanding economic shifts is not solely the domain of financial experts.

It’s about seeking credible information and connecting the dots to everyday life. This past week has been filled with financial updates, and like many Kenyans, I’ve been closely studying them, particularly the recently released PwC analysis of the 2025/26 national budget and the Central Bank of Kenya’s (CBK) latest decisions.

While most headlines focus on taxation and deficits, I believe something more profound is quietly unfolding at CBK: A bold shift that could transform how money flows in our country and directly impact the lives of everyday Kenyans. Before we zoom in on the CBK, let’s not overlook a small but significant trend in the budget. For the first time in a long while, we observed targeted allocations to green development: Sh8.2 billion for the blue economy, Sh4.5 billion for agro-industrial parks, and implementation of a national green finance taxonomy by the CBK itself.

These are encouraging signs that our economy is starting to align more deliberately with sustainability.

On June 10, the CBK announced a sixth consecutive reduction in the base lending rate, lowering it to 9.75 per cent. While this may sound technical, think of it as the CBK telling banks, “Don’t just hold your money, lend it.” This aims to encourage banks to issue more loans to businesses and individuals, stimulating growth from the grassroots.

• .

  Keep Reading

• 
  Bitter IMF austerity pill return overshadows budget unveiling
• 
  Kenyan central bank cuts benchmark rate to spur lending to private sector
• 
  Suspended Central Police Station OCS Samson Talaam breaks silence
• 
  Over 700 firms seek CBK licence amid crackdown on predatory digital lenders

However, what CBK is doing behind the scenes is more transformative. After a nine-year freeze, the CBK has reopened its doors for new commercial banks to be licensed, provided they meet strict capital requirements. This allows more banks to enter the market, leading to increased competition, innovation, and potentially lower interest rates.

At the same time, CBK has formalised 126 digital lenders that previously operated in the informal space. These institutions must now adhere to strict rules: clear terms, fair pricing, and proper consumer protection.

Let’s break this down for the average person. More financial institutions mean more access points for credit, especially for those often overlooked by traditional banks.

A vendor needing urgent funds no longer has to wait days for approval. A small-scale farmer looking to buy supplies before the rains may soon access quick, regulated loans through their mobile phone.

And while borrowing costs may still feel high today, the presence of many players will gradually create a fairer and more competitive lending environment. It’s like introducing more supermarkets in a town: prices go down, service improves, and options increase.

What we are witnessing is not just monetary policy; it is strategic courage. Instead of relying solely on government spending or taxation, the CBK is now empowering the private sector to drive the economy. By freeing up cash, opening lending channels, and demanding transparency, they are equipping the people with essential tools.

Yes, Kenya still faces fiscal pressure. Yes, we’re negotiating a new deal with the IMF. However, at least one key institution is not waiting passively. The CBK is acting boldly, proactively and inclusively. Of course, this transition requires strong regulation.

We must guard against predatory lending, data abuse, and risky speculation. However, when institutions rise to the occasion with such courage, we must support them. We should ask questions, stay informed, and ensure these policies produce real, visible impacts on the ground.

I believe this is a turning point. Kenya’s economy is tired of one-size-fits-all solutions. It now needs bold innovation, careful inclusion, and daring thinking. The Central Bank of Kenya has shown that even institutions can think like ecopreneurs - innovative, bold, yet grounded in long-term sustainability.

Let’s keep watching. Let’s keep learning. And most importantly, let’s stay hopeful. Think green, act green!