Farmers Party leader Irungu Nyakera has called on the Central Bank of Kenya (CBK) to lower the Cash Reserve Ratio (CRR) from its current 4.25% to 2.5%.
He argues that this move would inject much-needed liquidity into the Kenyan economy, which is currently facing severe challenges.
In a statement, Nyakera explained that the CRR, which represents the percentage of a bank’s total deposits that must be held in reserves with the central bank, is set much lower in many stable global economies.
He noted that, countries such as the United States, Canada, Australia, and Sweden have set their CRRs at 0%, while the eurozone’s CRR is just 1%.
Nyakera further noted that the Kenyan economy is struggling with liquidity issues, worsened by the reluctance of banks to lend to the private sector.

“Given the liquidity challenges that the Kenyan economy is currently experiencing, CBK should consider lowering the CRR from 4.25% to 2.5%, as seen in South Africa,” Nyakera said. “This move would release approximately KES 60 billion into the economy, which banks could then lend to businesses and individuals.”
He also proposed that CBK require banks to use the newly freed-up funds exclusively for lending to the private sector, including both individuals and corporates, rather than to the government.

Nyakera cautioned that any bank found contravening this directive should revert to the original 4.25% CRR.
“This could serve as an effective and easy stimulus package for the government to explore,” Nyakera concluded.