Kenyan insurers turn their backs to banks and invest in treasury bonds

Kenyan insurers have grown indifferent to the short-term deposits they detain in commercial banks, preferring to invest in the more profitable Kenyan treasury bonds. Current deposits of a three-month period would generate 12.5% yields before the State stepped in imposing a 7% cap of these accounts in 2017.

As a consequence to this decision, banks have sustained a decrease of the amounts invested in short-term deposits which has been estimated at 15%. These accounts allowed banks to finance companies by providing them with loans. The State took advantage of this situation by managing to make loans at competitive rates.

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