President Uhuru Kenyatta has expressed his frustration over the inability of Kenyans to get credit from banks despite the lowering of interest rates.
The President, in his State of the Nation address, said his administration would look into the matter before the elections.
President Kenyatta said he was aware of the concerns of small and medium enterprises, which are unable to get credit despite the fact that loans in Kenya are the most affordable in the region after the capping of interest rates in September last year.
âOn the issue of access to credit for SMEs, it is unfortunate that the unintended consequence of the capping of interest rates was a slowdown in lending by our commercial banks,â the President said.
He added: "This is an issue that concerns us and is one that I will actively seek to resolve so that credit can start to flow again to the real drivers of our economy.
Treasury Cabinet Secretary Henry Rotich told the Standard: âThe government is monitoring the situation with a view of taking appropriate action, including reviewing the way the capping operates.â
Wanjiku will give in because banks have better ways of investing their cash with no risk in government paper. If government paper yields similar returns to loaning Wanjiku, banks will automatically prefer lending to the government at zero risk of default. In fact, I am beginning to think that the rate cap was a clever way of forcing banks to loan to the governmentâŚbecause at 22%, there is no way they would have loaned a broke government instead of Wanjiku
I was typing as you wrote thisâŚgreat minds think alike. See comment above. Capping rates was the only way to give the broke government some quick cash. I am sure the caps rate will be removed soon after the elections, when Uhuru doesnât need our votes again.
Jude njomo admitted that the law on interest cap should have been accompanied with a cap of govt not borrowing loans from the local banks, but look on the brighter side saccos are now filling the gap because of the low interest rate and their trust in lending wanjiku money
His statement when signing the law capping rates: ââ, I have consulted widely Kenyans are disappointed and frustrated with the lack of sensitivity by the financial sector, particularly banks. These frustrations are centered around the cost of credit and the applicable interest rates on their hardâearned depositsâ'. So if Kenyans are getting large interest from their deposits, what is the complaint now. If I remember, Rotich himself spoke against capping. Only for Uhuru to sign. And I wonder who he consulted.
The government has ways to borrow at lower interest rates. And very fast if needed. Several International lenders on standby. Kenya has a decent credit rating so it makes it easy.
You cant also force them to lend, using a law. Thats like forcing someone to do a business. On your terms. It will never work. Not with Kenyas economy. And culture. We operate on a culture of soft lending and borrowing. Its our spirit. Thats why the banks thrived before this. They capitalized on this.
And mungiki shiny eyes were here ululating how they will quickly access loans cheaply and do business. Tried to explain why Njoroge was against this cap, and this was a populism move that will make access to credit harder, nikaambiwa kaa kando kiyana, RWNBP.
@Okiya , kindly assist na hiyo thread ya interest caps, siipati.
Like have said, and i will repeat again. FREE MARKETS CAN NEVER BE DICTATED!!!
fuel is kinda a closed market. Fully controlled by the govt. Ukikosa mafuta pale port, there is nowhere to run to. Ndio maana ata mukiekewa fuel levy at 300%, mtapiga tu kelele kwa barabara, but at the end of the day, mutainnua tu na hiyo bei
if you gonna bring tribalism to such a respectable thread, kindly for our own sanity stick to âmamanzi wamejaa kwenye clubâ local music and DJ Shamakhokho crappy mixes.
Borrowing dollar denominated loans brings about a forex riskâŚthe government would rather eliminate that risk by borrowing locally. The governmentâs optimum strategy is to milk local banks dry before seeking other options.
i usually call it as it is, its prudent if you just commented without the tribal overtone, your message would still have been passed. kama ni shiny eyes - dim eyes wars you crave for just click on the politics thread, the crazy battalion over there is always on call 24/7 but just donât hide behind a business thread.