Farmers Party Leader Irungu Nyakera Calls for CRR Reduction to Stimulate Kenya’s Economy

Farmers Party leader Irungu Nyakera has proposed that the Central Bank of Kenya (CBK) reduce the Cash Reserve Ratio (CRR) from its current level of 4.25% to 2.5%, suggesting that such a move would provide a much-needed liquidity boost to Kenya’s struggling economy.

In his statement, Nyakera pointed out that many stable global economies have set their CRRs much lower, with the United States, Canada, Australia, and Sweden all having a CRR of 0%, while the eurozone has it set at 1%.

“The Kenyan economy is grappling with liquidity challenges, worsened by banks’ reluctance to lend to the private sector,” Nyakera said. “Lowering the CRR from 4.25% to 2.5%, similar to South Africa’s approach, would release approximately KES 60 billion into the economy, providing banks with more funds to lend to businesses and individuals.”

Nyakera went on to suggest that the newly freed-up funds should be reserved exclusively for lending to the private sector, rather than the government. He proposed that any bank found violating this directive should be required to revert to the original CRR of 4.25%.

“This is a simple yet effective way for the government to stimulate the economy, and it’s a move that could unlock billions of shillings to support Kenyan businesses and individuals,” Nyakera added.