By Magdalene Mukami
NAIROBI, Kenya (AA) – Kenyan president Uhuru Kenyatta on Wednesday approved a bill capping bank interest rates on loans and deposits in the East African country.
In a statement Kenyatta said that since receiving legislation passed by the National Assembly on July 28 consultations had revealed “Kenyans are disappointed and frustrated with the lack of sensitivity by the financial sector, particularly banks”.
Kenyatta said that frustrations center on the cost of credit and applicable interest rates on hard-earned deposits.
On Wednesday morning members of the Consumers’ Federation of Kenya held peaceful demonstrations in the capital calling for the president to sign the interest-rate laws.
Kenyatta noted that this was the third time that the National Assembly was attempting to reduce interest rates to affordable levels.
In previous cases banks had made promises to the government but failed to deliver as interest rates continued increasing.
“Kenya has one of the highest returns-on-equity for banks in the African continent. Banks need to do more to reduce the cost of credit and ensure that the benefits of the vibrant financial sector are also felt by their customers,” Kenyatta said.
“Upon weighing carefully all these considerations, on balance, I have assented to the Bill as presented to me,” he added.
He acknowledged that the new law would give rise to new challenges which could include credit becoming unavailable to some consumers and the possible emergence of unregulated informal and exploitative lending mechanisms.