Members of Parliament failed to raise the numbers needed to veto a presidential memorandum rejecting a Bill that would have compelled lenders to first seize the assets of defaulting borrowers before going for guarantors' property.
The Law of Contract (Amendment) Bill, 2019, which was sponsored by Juja MP Francis Waititu, sought to make changes to the Law of Contract Act, which would have insulated guarantors from being immediately liable in the event a principal borrower defaulted on a loan.
Parliament passed the Bill in September last year and it was only awaiting President Uhuru Kenyatta's approval. But the president signaled his intention last month when he rejected the proposed law and returned it to the National Assembly with recommendation that the offending clause be deleted.
To push the Bill through, Members of Parliament were now required to marshall a two-thirds majority during voting on the memo.
When the matter was called for a vote on Tuesday, the 'nays' against the president's position were resounding, but they were betrayed by the lack of numbers – 233 to be exact. As a result, the 'ayes' carried the day.
Efforts by some MPs to force a division – a physical vote – flopped as they could not marshal the numbers required for the vote. Only 28 lawmakers stood up, leaving Deputy Speaker Moses Cheboi with no option but to declare that the president’s reservations had carried the day.
Insensitive creditors
The MPs rooting for the Bill's passage lamented that guarantors would now be exposed to creditors insensitive to their plight.
"This is a sad day for Kenyans. Waititu’s amendment was very good because it sought to protect innocent guarantors. Sadly we will only watch because, of course, we cannot raise the threshold to defeat the president’s memorandum,” said Minority Leader John Mbadi.
Justice and Legal Affairs Committee chairman William Cheptumo also protested the president’s decision, saying Waititu's amendment was meant to cure the suffering of guarantors who have been falling victims to banks and saccos that rush to attach their property to recover their money.
"The amendment was very noble. We are saying that the lending institutions should first pursue the borrowers and not the guarantors. Kenyans have been suffering because banks and saccos run after them to attach their property once the borrower defaults. It was only fair that we stop this,” said Mr Cheptumo.
Ndaragwa MP Jeremiah Kioni urged the Head of State to be cautious when rejecting Bills the legislators were pushing in the public interest.
"The president must be careful not to be seen as abusing his veto power. I know he has the interests of Kenyans but we are also elected to represent Kenyans and, importantly, to legislate,” said Mr Kioni.
But Majority Leader Aden Duale, who moved the president’s reservations, and Kipipiri MP Amos Kimunya, voiced their support for the veto, saying the move would ensure guarantors only agree to back borrowers who are able to pay their loans.
"Kenya cannot be seen as a country that will legislate to encourage defaulters. That would make us a pariah State. We should not encourage this culture of defaulting by supporting the president’s recommendation,” said Mr Kimunya.
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