Banking Act’s success motivates legislation by MPs

President Uhuru Kenyatta’s decision to sign the Banking (Amendment) Bill capping interest rates into law was a victory for Kenyan borrowers.PHOTO: COURTESY

President Uhuru Kenyatta’s decision to sign the Banking (Amendment) Bill capping interest rates into law was a victory for Kenyan borrowers. Besides the many challenges that will most certainly bedevil its implementation, the Act is evidence of the power of public opinion in influencing policy decisions.

From the start, it was clear that the Executive branch, backed by serious policy making organs of state (including the Treasury and the Central Bank), was against the Bill. But Parliament passed the popular Bill anyway and then leaned on public opinion to force the President’s hand. The President could have vetoed the Bill. But doing so would have spawned multiple political challenges he was not willing or able to deal with.

First, it is common knowledge that the President’s family has interests in banking. If he had refused to sign the Bill, the public would have most likely raised questions over potential conflict of interest. Signing the bill foreclosed on such arguments.

Second, and perhaps more importantly, the President did not want to pick a fight with the National Assembly whose outcome he could not predict with reasonable certainty. On account of its unabashedly populist content, nearly all MPs supported the Bill. No one wanted to be listed as the one who denied his or her constituents cheap credit.

 A presidential veto would have likely been met by a Parliamentary veto override. Of course there was also the possibility of the banking lobby would intervening by shipping the waheshimiwa to the South Coast. But this was a gamble that came with a significant amount of risk for the President and the banking lobby.

We will not know for sure what would have happened if he vetoed the Bill. To the best of my knowledge the current Parliament is yet to override a presidential veto.

But this alone is not proof that Parliament cannot do so. Being a rational individual, the President must be aware of the law of anticipated reactions, which dictates that he should only pick fights with the legislature that he thinks he can win.

Clearly he did not think that he could win this particular fight. He therefore rolled the dice with the hope that the country learns its lessons. I am on record as being opposed to the Bill. But as a matter of strengthening our public policy making processes, I think the Act is an enormous learning opportunity.

I hope Parliament – and especially its Standing Committees – will see this as evidence of their latent power in the policy making process. Instead of sitting back and making appeals for policy change like complete outsiders,

Parliament has the ability to force the hand of the executive branch into policy directions that are beneficial to wananchi. The country could do with more of such statutory interventions in the policy process.

But for these newly discovered powers to work, Parliament must be willing to invest in the capacity to make sound policies and to effectively monitor their implementation. Currently, the presidency has near monopoly on policy expertise. This calls for significant investments in staff and advisers in order for parliamentary Standing Committees to be able to match the executive’s ministries and agencies.

Such investments will also enable Parliament to effective monitor the implementation of specific laws and regulations it passes. The Constitution gives it powers to independently supervise and regulate state agencies and departments.

Lastly, whatever the outcome of the implementation of the Act, I hope that as a country we have learned that we have the power to shape our social and material destiny via the policy process. We will definitely make mistakes in the process – like I think we did in this instance. But no country ever progressed without taking risky chances.