Kenyan banks lash out at draft bill

The Star Early Edition - - INTERNATIONAL - Ade­laide Chang­ole

A NEW row is brew­ing be­tween Kenyan banks and par­lia­ment after a leg­is­la­tor pro­posed plac­ing re­stric­tions on de­posits by state-owned com­pa­nies, months after the state im­posed a cap on lend­ing rates.

Ki­mani Ichung’wah, vice-chair­man of the pub­lic in­vest­ments com­mit­tee, drafted a bill seek­ing to bar state-owned com­pa­nies from in­vest­ing or de­posit­ing pub­lic funds with banks in which the gov­ern­ment has less than a 20 per­cent stake.

Ichung’wah de­clined to spec­ify when the bill would be pre­sented to leg­is­la­tors yes­ter­day.

“The bill seeks to pro­vide that a pub­lic body may only de­posit funds and in­vest sur­plus funds in gov­ern­ment-owned banks,” he said by phone on Mon­day. “The bill de­fines a gov­ern­ment-owned bank as a bank in which the gov­ern­ment owns or holds at least 20 per­cent of the shares.”

Shares in Kenya’s big­gest banks have fallen as much as 27 per­cent since the gov­ern­ment in­tro­duced a law in Au­gust cap­ping com­mer­cial lend­ing rates at 400 ba­sis points above the of­fi­cial bench­mark rate.

The ceil­ing was likely to curb growth in east Africa’s big­gest econ­omy this year, the In­ter­na­tional Mon­e­tary Fund warned in Novem­ber.

The new law would re­sult in gov­ern­ment funds be­ing chan­nelled to var­i­ous min­istries, de­part­ments, agen­cies and coun­ties through ei­ther the cen­tral bank or the five banks in which the gov­ern­ment owns at least 20 per­cent. – Bloomberg

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