NAIROBI, Kenya, Jun 21 – A new report on the banking sector has shown Kenyan banks spent Sh39 billion to pay staff with a reported fall in employee numbers by 2,792, mainly due to realignments attributed to advancement in financial technology.
Kenya Banking Industry Shared Value Report 2019 shows an increase in productivity with 90 per cent of interviewed bank customers saying service delivery had improved.
“Technology has seen realignments in many organizations leading to the number of employees fall by 2,792 between 2016 and 2017, staff productivity and service delivery have improved,” the report indicates.
The Sh39 billion spent on staff included wages and benefits shared to more than 30,000 people employed in the banking sector.
Furthermore, banks also improved salaries and remuneration of their personnel where data from the Central Bank of Kenya shows that salaries and wages as a ratio of banks income increased from 16.9 percent in 2016 to 18.6 percent in 2017.
The report reveals that while technology has been a key factor to growth, it has led to several employees losing their jobs since 2016.
“Despite the many jobs lost during the period, technology has made work easier and faster. On average, one employee was serving 1,227 customers in 2016. The same employee is now serving more than 1,544 customers as a result of increased efficiency from technology,” the report by the Kenya Bankers Association (KBA).
It also shows that banks have lent a sum of Sh480 billion to the National Treasury in the last three years.
The cash was used to fund developments and government’s recurrent expenditure with an exception of funds sent to the accounts of county governments which represented the largest cash injection from commercial banks in recent times.
During this period, Members of Parliament passed the Banking Act, 2016, which introduced interest rate controls that had a chilling effect on the growth of credit.
Previously the Central Bank of Kenya revealed findings that the rate caps reduced lending to Micro, Small and Medium-Sized Enterprises (SMEs) and consequently contributed to a 1.4 percent decline in the growth of GDP in 2017.
The SME portfolio was growing at a rate of 15 per cent per annum, which reduced to 6 per cent by September 2016.
Bank lending to SMEs fell by as much as 5.7 percent equivalent to Sh13.8 billion between August 2016 and April 2017, according to KBA.
“Since then more than Sh40 billion has been redirected from enterprise development to Government debt since the rate cap law was enacted,” says KBA.
Commercial banks, according to the report, boosted government revenue contributing Sh70 billion and Sh73 billion in taxes during the 2016/2017 and 2017/2018 financial years, respectively.