This archive report was first published on 5 November 2019.
On November 5, 2019, commercial banks scored a significant victory when the National Assembly failed to get the required numbers to veto President Uhuru Kenyatta's reservations on the Finance Bill, 2019.
The President had previously expressed his reservations on the bill in a memorandum dated October 16, 2019, where he refused to assent to the bill and instead recommended the repealing of Section 33B of the Banking Act, which capped interest rates.
Section 33B was introduced in 2016 by Kiambu Town MP Jude Njomo as an amendment to the Banking Act, with the aim of capping interest rates at four percentage points above the benchmark Central Bank Rate to cushion Kenyans from high loan costs and exploitation by commercial banks.
However, the banks opposed the move, arguing that it would stifle the growth of small banks and hurt private-sector lending while making it easier for the government to borrow from the domestic market.
When the bill was discussed on November 5, 2019, only 161 of the possible 349 legislators were in the House, meaning the issue could not even proceed to the voting stage.
The Constitution provides that at least two-thirds, or 233 of the MPs, must be physically present in the House before it can veto the President's memorandum.
As a result, the President's reservations will be incorporated in the Finance Bill, 2019, to be taken to him for assent before the end of the week.
