This archive report was first published on 26 September 2019.
On September 26, 2019, Kenya's Parliament voted to reject a Finance Ministry request to remove interest rate caps, which have been in place since 2016.
The caps, which limit rates banks can charge customers at four percentage points above the central bank's benchmark, were introduced to address concerns about high interest rates.
However, the Finance Ministry argued that the caps have cut private-sector credit growth as banks shunned lending to customers deemed risky, including small and medium-sized businesses.
The central bank also opposed the caps, stating that they had probably cut 0.4% from 2017 economic growth.
Despite the opposition, lawmakers voted by acclamation to reject the Finance Ministry's request, although they also backed a measure making the language on the caps clearer.
The ruling was issued in a case brought by a private citizen challenging the caps, and an appeal against the ruling is pending before a higher court.
Lawmakers have started a separate amendment to banking laws to comply with the court's ruling.
The next step after the parliament completes voting on the cap and other amendments to the budget is for them to be sent to the president, who will then approve or send them back to parliament, outlining any reservations he has.
