Steve Umidha @steveumidha
The negative bearings of the capped interest rate on consumer spending and business investment will drag the country’s Big Four projects, Deputy President William Ruto has said.
In a forum that largely focused on development policies and rigidities in access to financing, Ruto yesterday said that a repeal of the Banking Act, which allowed capping of interest rate and increasing private sector investment, was the only way to meet the Big Four ambitious targets, which is anchored on universal health for all, food security, manufacturing and affordable housing.
“Certain structural and policy rigidities must be eliminated to guarantee that every development shilling or dollar invested goes as far as it possibly can,” said Ruto during the 10th development partnership forum in which he met several development partners including financial powerhouses like the World Bank, African Development Bank, embassy diplomats, private sector and county governors. The government is targeting the functional institutions to help finance the big four plan.
A repeal of the Banking Amendment Act, which came into operation in September 2016, according to most economists had struggled to appease the credit market.
Instead, the law which bars banks from charging more than four per cent above the Central Bank Rate – has made it impossible for private sector players and particularly small businesses to access credit.
Experts now argue that to reverse the ‘blunder’ policymakers should in its place, have a rescinded one that incorporates “customer-protection rules.”
“Development partners, the private sector and other non-state actors will play a pivotal role in our strategy to manage some of these challenges to increase and eliminate inequalities,” he said.
Swedish Ambassador to Kenya Anna Jardfelt who spoke on behalf of development partners present said: “For effective delivery of results, resources need to be optimised so as to add value to Kenya’s development agenda.”