CBK Governor Dr Patrick Njoroge and Treasury Secretary Mr Henry Rotich at a past event.
The Consumers Federation of Kenya (Cofek) welcomes the decision by the Finance Committee of the National Assembly to reject Central Bank of Kenya (CBK) proposal to scrap the law capping interest rates.
The House Committee's position vindicates our view and that of the Institute of Certified Public Accountants of Kenya (ICPAK)
As we have stated, time without number, we do not support long term price controls. But where governance and regulatory discipline has dipped, such as the case with Kenya’s banking and financial services sector, price controls are inevitable.
When His Excellency President Uhuru Kenyatta hesistantly assented to the Bill on August 24, 2016 he observed that while it was a painful decision, he had to accept realities of public outcry. He pledged that the effect of the legislation would be monitored over time.
Instead of CBK offering factual insights and demonstrating the purported failure of the law, the CBK Governor Dr Patrick Njoroge has taken to a non-persuasive blanket condemnation of the law before and after assent.
He has declined requests to meet with consumer representatives while he regularly consults the bankers lobby. That he is an embodiment of skewed regulatory failure is a matter within the public domain.
It for this reason that we agree with MPs that Dr Njoroge has fallen to the IMF policy capture. CBK must do more homework to persuade consumers, accountants under ICPAK and MPs that his call to scrap the caps is genuine. He has also little to instil sector discipline and stemming huge government appetite for domestic borrowing
The banks liquidity ratios are far from showing any danger signs. As a result of other hidden and escalated ones, some banks seem to be performing even better under the rate caps regime than before.
The cliché excuse of reduced credit access to the low income earners is a choreographed cartel-like initiative that has been rehearsed to make the Banking Act (Amendment) 2016 look bad.
We appeal to the media to equally allow the voice of consumers to be heard on this matter. Thank you.