Kenya refuses to cap rate in draft law

Kenya’s Treasury avoided mentioning a cap on commercial-bank lending rates in a draft law on the conduct of the financial sector that was published for public comment late on Wednesday.
The government capped commercial lending rates in September 2016 at 4 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, according to Reuters.
The cap has been blamed for a slowdown in private-sector lending growth, and Kenya’s commercial banks are lobbying for it to be repealed. The International Monetary Fund has said the cap must be repealed for the East African nation to keep access to balance of payments support from the Fund.
Henry Rotich, the finance minister, had said the cap would be repealed in the financial markets conduct bill, which will be presented to parliament next month. Rotich did not immediately answer calls requesting comment.
A source at the Treasury said the government had realised repealing the cap would be difficult because of opposition from lawmakers, who proposed it in the first place.

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