Kenya lifts interest rate cap, Equity Bank to benefit the most

Analysts see Kenya’s Equity bank benefitting most from the lifting of the interest rate cap REUTERS/Thomas Mukoya Kenya has lifted its interest rate cap, in a move meant to revive shrinking credit access to the private sector.

Parliament failed to raise a two-thirds-majority which would have allowed it to push through the crucial Finance Bill 2019 with the cap intact, which President Uhuru Kenyatta had refused to assent to . The vote, held on November 5th, effectively ended Kenya’s experiment with rate caps, which were first introduced in 2016.

Kenyatta signed the bill two days later, meaning that banks are now free to determine what interest to charge on credit.

Kenya’s top bank executives, and Central Bank Governor Patrick Njoroge, have repeatedly blamed the rate cap for the declining access to credit, as banks preferred to loan to low-risk borrowers such as the government and large corporations.

On the other hand, legislators, some of whom stormed out of Parliament after the vote, have insisted that the cap was necessary to protect borrowers from high interest rates.

KCB Group CEO Joshua Oigara, however, doesn’t think rates will rise s harply any time soon because “The macroeconomic and business environment where we are today does not at all support an environment of high rates.” “Customers with high-risk profiles we may see a 2-3% increase. We are not going to see a massive change. As a leader in the industry, we don’t see an opportunity to go back to the old behaviour of high rates,” he added.

Opportunity knocks again

Complete the form and download, for free, the highlights from The Africa Report’s Exclusive Ranking of Africa’s top 200 banks from last year. Get your free PDF by completing the following form

Country * … Afghanistan Albania Algeria American Samoa Andorra Angola Anguilla Antigua and Barbuda Argentina Armenia Aruba Australia Austria Azerbaijan Bahrain Bangladesh Barbados Belarus Belgium Belize Benin Bermuda Bhutan Bolivia Bosnia and Herzegovina Botswana Brazil British Virgin Islands Brunei Bulgaria Burkina Faso Burundi Cambodia Cameroon Canada Cape Verde Cayman Islands Central African Republic Chad Chile China Christmas Island Cocos(Keeling) Islands Colombia Comoros Congo Congo, Democratic Republic of the Cook Islands Costa Rica Cote d’Ivoire Croatia Cuba Cyprus Czech Republic Denmark Djibouti Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Ethiopia Falkland Islands Faroe Islands Fiji Finland France French Polynesia Gabon Georgia Germany Ghana Gibraltar Greece Greenland Grenada Guadeloupe Guam Guatemala Guernsey Guinea […]

Stay in the Know!

Sign up for the latest news and information on African Companies and Economy.

By signing up, you agree to receive MoneyInAfrica offers, promotions and other commercial messages. You may unsubscribe at any time.

Leave a Reply