Kenya's Gold Rush Sparks New Demand for Bank Loans

Source:

"The Central Bank of Kenya's 'mining and quarrying' sector recorded the highest growth of new loan accounts in recent months as explorers flock to the mineral-rich region."

A rush for gold in mineral-rich western Kenya region has increased the number of fortune hunters applying for bank loans to develop mines.

The "mining and quarrying" sector recorded the highest growth of new loan accounts opened in January and February, according to data from the Central Bank of Kenya.

Loan accounts opened by mineral prospectors went up 26.6% in January and February to 1,294, marking a sharp increase after stagnating since December 2009.

Mr. Moses Masibo, the acting commissioner of mines at the Ministry of Environment and Natural Resources said the shift in the sector is attributable to discovery of gold deposits in Western Kenya and the North Rift, and iron ore in Eastern region.

Data from the Kenya National Bureau of Statistics indicates that gold and soda ash were the biggest mineral exports in 2009, earning the country Sh2.2 billion and Sh6 billion respectively.

Mr Masibo said gold has been an attraction for several multi-nationals since mid last year.

Recent surveys by both the government and private companies have revealed there are large amounts of gold deposits around Migori and Kakamega in western Kenya.

More than a dozen international mining firms have intensified their activities in the Lake Victoria Basin which mining experts say might experience a real gold rush in the next 10 years.

The firms include Aviva Corporation of Australia, Afri Ore Ltd, East Africa Pure Gold Ltd, Covenant Mining Ltd, Karebe Gold Mining Ltd, Gold Rim Exploitation (K) Ltd and Abba Mining Company.

The arrival last year of South African investment bank, Absa Capital, for talks with Kenya's capital markets regulator the Capital markets Authority, on the prospects of establishing gold-backed exchange traded funds at the Nairobi Stock Exchange is the strongest signal yet of the heightened international interest in the precious mineral.

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe