Bank interest rates cap should remain
This week, Central Bank of Kenya (CBK) Governor Patrick Njoroge said the law capping bank interest rates could be reversed soon. No basis was given for this pronouncement.
However, CBK has no power to reverse the Banking Act, 2016. Only Parliament can reverse the law, while giving adequate reasons or alternative mitigation.
There is also a similar campaign by the International Monetary Fund (IMF) and the Kenya Bankers Association to reverse this Act. In their rush to seek a reversal of the law, both CBK and the National Treasury have never clarified one pertinent question:
Whether the fears that necessitated a regulated interest rates regime have since been addressed.
Consumers will not continue to finance corruption and inefficiencies within banks via inflated interest rates.
Meanwhile, we thank Deputy President William Ruto for repeatedly siding with consumers and insisting that the rate caps are here to stay. We urge Parliament to undertake a rigorous level of public participation and mitigation before contemplating amending the Banking Act, 2016.
On our part, the Consumer Federation of Kenya (Cofek) will do everything possible to keep the rate caps until such a time that CBK and the National Treasury will address the non-tansparent pricing of loans and reduction of the cost of credit in Kenya. Stephen Mutoro, Cofek