This archive report was first published on 5 November 2019.
Uhuru's Bid to Scrap Interest Rate Cap Receives Boost ¶
President Uhuru Kenyatta's bid to scrap interest rate caps has received a boost after the National Assembly adopted a proposed amendment to the Finance Bill 2019.
According to the Finance Bill 2019, banks will be allowed to charge their own desired interest rates to borrowers once the bill is signed into law by President Uhuru Kenyatta.
Uhuru had argued that the existing interest cap was hurting the country's economy, leading to a credit squeeze as banks feared to lend to borrowers who are regarded as high risk.
He said that SMEs were among the hardest hit and they had since turned to shylocks who took advantage of their desperate need for loans.
Uhuru's argument is in sync with that of National Treasury and CBK which hold that rate caps are hurting the country's economy.
Earlier, CBK Governor Patrick Njoroge described the state's control of borrowing rates as driving a car with an already engaged handbrake.
On November 5, 2019, the National Assembly adopted President Uhuru Kenyatta's memorandum seeking to scrap interest caps.
Uhuru told parliament that capping of bank rates had led to mushrooming of shylocks who were taking advantage of borrowers.
A section of MPs opposed to the bill said the bill if signed in to law, will result in a situation where banks levy exploitative interests to borrowers.
