Kenya could modify or scrap a law that caps commercial lending rates, President Uhuru Kenyatta said on Tuesday.

He recognised that access to credit for small and medium enterprises (SMEs) had dried up as a consequence.

Kenya capped commercial lending rates in September 2016 at four percentage points above the central bank’s benchmark rate, which now stands at 9.5 per cent, in an attempt to limit the cost of borrowing for businesses and individuals.

Although the aim was to help small traders access capital at affordable rates, the cap had the opposite effect, as lenders deemed SMEs too risky to lend to, saying they could not price risk properly while the cap was in place.