NAIROBI, KENYA: Jude Njomo, the Kenyan lawmaker who proposed the cap on commercial banks’ lending rates says he is “sure” last week’s move by the finance minister to repeal it will be defeated in parliament.
In his budget proposals for the 2018/19 (July-June) fiscal year, finance minister Henry Rotich blamed the cap for a slowdown in private sector credit growth and said it would be repealed.
“I’m pretty sure this is something that is not going to sail through,” lawmaker Jude Njomo told Reuters on Monday, reacting to the minister’s budget speech, which proposed repeal of the cap that was imposed in 2016.
Njomo said there had been no evidence that lenders could be trusted to regulate themselves and offer affordable credit. At the time it was introduced, the government said the cap — at 4 percentage points above the central bank rate — would help lower costs of borrowing.
“The executive has brought the proposal. But we also have a responsibility, like people’s watchmen, like people’s representatives to speak on behalf of the people... our people would not like the interest rate cap to be removed,” he said.