Wananchi Opinion: Kenya’s Monetary Policy Test Ahead of 2026

As Kenya casts its sights forward and looks towards the year that looms; 2026, the discussion that is taking shape surrounding the nation's monetary policy is no longer limited to interest rates and inflation statistics.

Much more at the root of all things is the question of how the nation can, and should, safeguard the stability of the economy, while at the same time facilitating the availability of credit for the common man.

Kenya’s master plan, Vision 2030, also emphasizes macroeconomic stability as one of the core building blocks of growth.

This is because macroeconomic stability has an intrinsic mechanism of building investors’ confidence and creating demand due to predictable prices, an exchange rate, and financial system stability.

In view of this, it is important to note that it is not only an exercise or task of technicality when the Central Bank of Kenya aims at managing and maintaining control of inflation and liquidity.

However, the Bottom-Up Economic Transformation Agenda (BETA) also cautions policymakers that economic growth should be felt even beyond GDP performance.

Provision of affordable credit is one such critical agenda component, more so for micro, small, and medium-scale businesses; informal retailers; and households who depend on their income sources for constant cash flows.

In most Kenyan households, the nature and purpose of credit is not about expansion or balance sheets; rather, it is about replenishing their shops, buying farming inputs, or filling income gaps during tough times.

That is where the tension tends to lie. A tightening of monetary conditions in-order to keep inflation rates low or support a stable exchange rate can see borrowing become more expensive as lenders start becoming cautious enough to opt for more secure investments such as government papers when banks are faced with lending to smaller firms who are required to meet higher lending standards.

A likely consequence of such actions is a tightened credit supply for those very segments who BETA wishes to support.

Financial inclusion policies are designed to bridge this divide. The experience in Kenya with mobile money has brought about great success when it comes to taking basic financial services to most people and achieving goals set in Vision 2030 and other SDGs like decent work and less inequality.

However, with the adoption of new regulatory reforms set to be enacted in the upcoming year 2026, especially focusing on digital lending and consumer protection, Kenya has moved on to ensure sustainability rather than focusing on speed when it comes to lending and borrowing.

The macroeconomic environment cannot be ignored either. As the government continues to take care of its spending pressures and local borrowing, it could impact private sector borrowing as well.

From the point of view of development, this goes to emphasize the importance of an effective capital market and development assistance programs.

Credit guarantees, developmental finance initiatives, and collaborations between the government and private banks are now considered methods to ensure that the money keeps coming to the productive segments without disrupting the gross domestic product-monetary balance. These go the conceptual mile of Vision 2030 and BETA.

Moving forward, it is now not a question of Kenya balancing stability with inclusion but ensuring the two happen together. While Vision 2030 offers the vision for the future, BETA makes sure that the vision is taken down to the grassroots level.

While the stability that is created by the Central Bank is necessary for the journey ahead, financial inclusion determines who joins the journey.

How the above interacts will not only affect the economic factors but the practical experience for the people of Kenya.