Midiwo: Banks in last ditch effort to defeat interest rates

Joint Government Whip Jakoyo Midiwo has said that bankers are in last ditch efforts to stop MPs from approving the interest rate caps in the Finance Bill.

Speaking to the Nation from Cape Town, South Africa, Mr Midiwo said the bankers had scheduled three meetings in three posh city hotels with MPs ahead of the re-tabling and discussion of the Finance Bill this Thursday afternoon.

The final meeting, he said, will be a lunch date at Sarova Panafric Hotel.

“The banks have been talking to MPs to go slow on the amendments. They tried to talk to me, but I told them to come up with tangible options to the high interest rates that are in the country. They did not and have refused to negotiate,” said Mr Midiwo.

The MP had proposed amendments to cap lending interest rates at no more than four per cent of the Central Bank Rate. He also wants the banks forced to pay interest on deposits at a rate of at least 70 per cent of the base rate set by the CBK.

On Thursday, Mr Midiwo said he had instructed Gwassi MP John Mbadi and his Rangwe counterpart Martin Ogindo to present and push his amendments in the House.

“I don’t think there was a conspiracy by the Treasury and the House Business Committee to bring the Finance Bill at a time when I was out of the country,” said Mr Midiwo. “But I want to urge my colleagues to think with their minds and not with their stomachs”.

“Kenyans should call, text, and talk to their MPs and tell them to ensure the amendments are approved. I don’t want to contemplate an eventuality where those amendments fail in the House. Because, then, who will speak for the Kenyans?” he posed.

The MP added that lawmakers are “paid handsomely” to act in the interest of the nation and they should push the banks.

While he insisted that he wouldn’t want to accuse his colleagues in the august House of being bribed to side with the banks and the cartels running the country’s economy, Mr Midiwo was worried that the moneyed clique was likely to woo MPs.

“These people think that their money will do everything. I want to tell them that no MP in his right mind will abandon Kenyans in their quest to get out of this cycle of exploitation by banks."

Mr Midiwo rehashed his public disagreements with Finance minister Njeru Githae on the negotiations between banks and MPs on the proposals to rein in the runaway interest rates.

“When we disagreed, he promised to meet me. I have been trying to reach him to get his proposals but he has not met me. It seems he is confident that the Treasury will marshall the numbers,” he said.

The quest to tame the banks over the high interest rates of up top 30 per cent, with the CBK rate standing at 18 per cent, has been on in Parliament for six months now.

MPs had first attempted to do so through the Banking (Amendment) Bill, but they realised that even if they approved the Bill, the President was unlikely to assent to it, and they’d have a hard time to raise the numbers to force the Head of State to append his signature on the Bill.

They thus decided to do so through the Finance Bill –which legalises the collection of taxes—because then the Head of State would have no option but to assent to it.

But the government put the Bill on ice leading to accusations that some of the taxes collected since January this year, were illegal.

Parliament’s Budget Committee has asked that the Finance Bill be tabled or else the Treasury be forced to refund at least Sh5 billion in “illegal taxes”.