This archive report was first published on 17 October 2019.
On October 17, 2019, President Uhuru Kenyatta rejected the 2019/20 budget, citing concerns over the interest rate cap.
The government had introduced the cap in 2016, limiting commercial lending rates to four percentage points above the central bank's benchmark.
President Kenyatta, in agreement with the Treasury and the Central Bank of Kenya, argued that the cap has hurt the economy by cutting private-sector loan growth.
According to the President, banks have avoided lending to customers deemed as risky, including small and medium-sized businesses and individuals who borrow for consumption.
Should lawmakers agree to remove the cap, borrowers would be left at the mercy of banks, while banks would have the freedom to price their loans based on their risk assessment.
