Parliament will block repeal of rate cap, MP says

Kenya’s parliament will block an attempt to repeal a cap on commercial lending rates, the lawmaker who sponsored the law imposing the cap said on Monday.

Introduced in September 2016, the cap limits lending rates to 4 percentage points above the central bank rate, now 9.0%. It was supposed to cut the costs of credit for businesses and private consumers, boosting access to loans.

In his budget speech to parliament last week, Finance Minister Henry Rotich proposed repealing the cap. He said it was keeping banks from lending to customers they considered too risky.

A similar attempt to remove the cap last year was rejected by lawmakers. Jude Njomo, a ruling party legislator who introduced the cap law, said the Treasury was being obstinate.

“These guys don’t want to accept the reality, so they keep on pushing. The reality is that the capping of interest rates is here to stay,” Njomo told Reuters.

He accused the minister of siding with commercial banks, rather than the citizens.