This archive report was first published on 29 October 2019.
President Uhuru Kenyatta's push to repeal the interest capping law has gained momentum after a parliamentary committee agreed with his proposal.
On October 16, the President sent a memorandum to the National Assembly detailing his reasons for refusing to sign the 2019 Finance Bill, which included the interest capping law.
The National Assembly Finance and National Planning Committee, chaired by Kipkelion East MP Joseph Limo, has now proposed an amendment to the Banking Act, effectively repealing the interest capping law.
However, the committee has suggested that agreements already made between lenders and borrowers should be exempt from the repeal, with the terms and conditions of the agreements remaining in force.
The decision to repeal the interest capping law has been met with criticism, with some arguing that it will lead to expensive loans for Kenyans.
According to the Banking Act, the interest capping law was introduced in 2016 to protect Kenyans from exploitation and high loan costs.
However, the law was opposed by banks, who argued that it stifled the growth of small banks and hurt private-sector lending.
The committee's proposal now lies with House Speaker Justin Muturi, who will determine whether the proposed amendments fully accommodate the President's reservations.
If the amendments are deemed to fully accommodate the President's reservations, the voting will be by a simple majority. However, if the amendments do not fully accommodate the reservations, the voting will be by a two-thirds majority.
