Commercial banks expect the release of a Sh22 billion stimulus package to stir up more quality lending opportunities in the private sector. The roll out of construction projects in all constituencies will raise demand for facilities that help vendors vie for and fulfil contracts such as bid bonds, bank guarantees, letters of credit and LPO financing. "Once the funds are released, we should see more overdraft facilities, bank guarantees and the leverage of loans," analysts from the CFC Stanbic research desk say. Lending based on government contracts gives the banks more comfort because the risk of non-payment is virtually inexistent. Data from the Central Bank of Kenya shows that lending has increased by 12.1 per cent, from Sh691 billion loaned out in December 2010 to Sh775 billion loaned in January but analysts reckon that more can be done. (Business Daily/John Gachiri)

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