Repealing the Interest Rate Caps

I wrote the following article on the 3rd of December 2019. I have long felt, and I believe it to be true, that the interest rates cap was one of the things that truly worked out in the favour of the working class in Kenya. It’s repeal was a sad day for this nation. Following electoral processes in other countries shows that the problem of lobbyists and interest groups for the big companies is not just a problem here but elsewhere. What is also true is that every country ought to fight this to give itself a good chance at allowing its citizenry to progress. Kenya and Kenyans lost in this fight, the banks won. Perhaps that will prove to be just one battle, with the war very far from over.

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“I support my president. He is our president after all and that requires not only support but also respect and so I do. When the president announced the new and revamped fight on corruption, my ever-optimistic heart bubbled and to this day I still look forward to the convictions and heavy penalties that will accrue of the miracle triad of presidential will, the DCI Kinoti, and DPP Haji’s efforts. Some reasonable fellow citizens tell me that I am hallucinating. When I see an ordinary mwananchi incensed by corruption to the extent that he, a tout, would muster the courage to stand up to the face of that corruption and call out a public officer he believes is up to customary corruption: but it is the tout who ends up arrested and charged at the end, I begin to wonder whether the nay-sayers may be right. But still, I support and believe that my president will do us well.

However, respect and support must not mean blindness. So today, my president rejected the finance bill and sent it back to parliament to have the interest rates cap removed. I read the memorandum to parliament: that wasn’t the president who wrote that. What I read was the regurgitant rhetoric of the bankers’ lobby. It is exactly the same thing the banks have been saying, word for word. They’ve been saying from before the time the president approved the interest rates cap. This is why I know that memo did not originate from the president, despite his signing it.

Noting then that it is a banker that wrote the memo on behalf of the banks and against the Kenyan people, the title may well have been, “betrayal of a people.”

The banks collectively are an oligopoly of sorts. Hypothetically, an oligopoly conspires to withhold a service, as form of protest against regulation that they deem to be unfavourable. Their intention is to force a favourable outcome against a policy they consider adverse to their interests, what should be our response as a country? The oligopoly then turns and says, “look your policy has resulted in a shortage of service. Reverse the policy.” What should be our response as a country? Can we reasonably close our eyes and pretend that we cannot see what the oligopoly is doing? Can we pretend that an appeasement policy towards a predatory group would benefit a country? I invite us to think not.

It doesn’t help that the ownership of banks in Kenya portends firm grounds for conflict of interest on this matter. The banking sector has continued to do well despite the tough economic times. Removing the rate caps serves one thing only: it allows banks to charge interest rates higher than the current 13%. 13% is already quite high but banks have in the past charged as high as 25% pa. This is what has really throttled the economy: these high interest rates. Many working class members of this society have felt the pain and the relief that came rate caps has been great. f

There is no national-interest reason to remove the rate caps. There is no patriotic reason to do so. Such a decision does not support the Kenyan mwananchi. It does not support the small businesses. It does however support the banks and the investors therein. At what cost? In tough economic times, let us not add salt to the raw wound.

Moreover, it does appear that the banker who drafted the memo sought to insult the intelligence of the Kenyan mwananchi by the disrespectful pyschobbabble crafted on the premise that Kenyans are daft: we are not. We are often betrayed by our leaders but we are not daft. Sometimes we tire of calling for better but we are not daft. Often times we choose the wrong people to lead, and base those decisions on really dumb reasons such as tribe and bribe, but still, we are not daft.

I would pray that parliament would reject the amendment, but if they don’t the very least they can do is return it to the drafters to remove the insult: that theoretical gibberish crafted to justify a different agenda by the banks. They should remove the point form reasons that assume we Kenyans cannot see beyond the charade. The very least is that they can have the memo be truthfully written: stating that it is requesting repeal of the caps to allow for free reign for the banks to boost their profits further or because of international pressure to that looks after the interests of the foreign investors in the mother banks, against the interest of the nation. At least, in so doing, in writing an honest memo, some respect would have been communicated to we, the Kenyan citizens.”

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