MPs Back Uhuru’s Request to End Cheap Loans for Kenyans

The National Assembly Finance and National Planning Committee has backed President Kenyatta’s recommendation to do away with interest rate capping. 

The committee chaired by Kipkelion East MP Joseph Limo, however, recommended the protection of existing borrowers from being affected until they clear loans issued before the scrapping of interest caps.

In a report to the House, the committee wants a new amendment introduced to state that any agreement or arrangement to borrow or lend which was made or entered into before the repeal of the interest capping remain in force on such terms including interest rates and for the duration specified in the agreement.

“The committee settled for the second option where they agreed to adopt the President’s reservations to Clause 45 and made a further amendment to save the rights of existing borrowers,” the Committee’s report read.

MPs are expected to debate the report in the House on Wednesday or Thursday.

Last week, President Kenyatta declined to assent to the Finance Bill, 2019 and asked MPs to scrap rate caps on commercial lending, which has reduced credit.

In 2016, the government imposed the caps on lending rates at four percentage points above the Central Bank of Kenya’s (CBK) benchmark to shield Kenyans against exploitation by lenders.