While lending rates by commercial banks have increased since 2015, the current average lending rate of about 23 percent,  1  Defined by the Global Entrepreneurship Monitor (GEM) as the proportion of the adult population that reported having discontinued a business within a year  Page 3 of 7  on shilling denominated loans, is not out of line with their historical average over the last few years.
The sector obviously also has certain characteristics which add to its vulnerability, thus warranting vigilance and close monitoring. First, although the small number of clients enables banks to have a good knowledge about their businesses, concentration of credit in a few groups of closely-related borrowers accentuates credit risk. This could have serious potential consequences for financial stability.