In a new twist of events, a regret or change of mind, President Uhuru Kenyatta now supports the removal of the cap on interest rates on loans
It is reported that Mr Kenyatta is in agreement with the Treasury and the Central Bank of Kenya that the interest rate cap is hurting the economy.
Their argument is that the cap has cut private-sector loan growth because banks have avoided lending to customers deemed as risky, including small and medium-sized businesses as well as individuals who borrow for consumption.
The notice from State House for repeal of the law that imposes a cap on interest rates will be communicated to lawmakers today.
This follows the Members of Parliament shooting down a proposal by Central Bank and National treasury in which the two institutions wanted the rate cap scrapped.
The government in September 2016 imposed the legal caps on lending rates at four percentage points above the Central Bank’s benchmark — currently nine per cent — and puts the maximum borrowing rate at 13 percent.
The bill was then sponsored by Kiambu Central Member of National Assembly Jude Njomo
The removal of the cap looks set to expose borrowers to high lending rates, which had touched a high of 25 percent before the introduction of the ceiling.
Poor Kenyans will now have to brace themselves with high interest rates from banks.
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