This archive report was first published on 15 January 2020.
On January 14, 2020, President Uhuru Kenyatta addressed the nation in Mombasa, outlining his administration's plans to boost the economy. He emphasized the importance of small and medium enterprises (SMEs) in the country's economy, stating that they account for more than 80% of all jobs.
Uhuru called on the Central Bank of Kenya to take action against predatory lenders, urging them to use their full range of instruments to prevent such lending and ensure that banks offer loans at affordable interest rates. He noted that the law capping interest rates, which was removed in 2019, had an adverse effect on the economy since its introduction in 2016.
The law, which capped interest rates at four percentage points above the Central Bank Rate (CBR), was meant to end expensive loans. However, banks subsequently denied loans to individuals and SMEs, arguing that the cap denied them the ability to price their default risk.
Uhuru stated that the law had an adverse effect on the economy and reduced the amount of available credit. He vowed to fight all constraints preventing the growth of SMEs and to ensure that they have access to affordable credit.
