New law to strengthen CBK’s role over prices
What you need to know:
- Speaking at the launch of the commemorative coin to mark the 50 years of Kenya’s independence, President Uhuru Kenyatta said the law will empower CBK as it plays the lead role in creating a conducive business environment, including a low and stable price regime.
- The president also urged the Central Bank and the National Treasury to work closely to ensure that the EAC Monetary Union Protocol signed on November 30, 2013 is fully realised for the benefit of all East Africans.
- Deputy President William Ruto said the high interest rates have made credit beyond the reach of many Kenyans.
The government is working on a new law that will strengthen Central Bank to enable it execute better its role of ensuring price stability and regulating interest rates.
Speaking at the launch of the commemorative coin to mark the 50 years of Kenya’s independence, President Uhuru Kenyatta said the law will empower CBK as it plays the lead role in creating a conducive business environment, including a low and stable price regime.
“The government will shortly introduce a new law that will strengthen the institutional framework of the Central Bank to better deliver on its core mandate of price and financial stability, a prerequisite for sustainable economic growth and development.
This law is expected to be in place by early 2014,” said Mr Kenyatta.
The president also urged the Central Bank and the National Treasury to work closely to ensure that the EAC Monetary Union Protocol signed on November 30, 2013 is fully realised for the benefit of all East Africans.
Deputy President William Ruto said the high interest rates have made credit beyond the reach of many Kenyans.
“There is a question I have always asked the chairman (Kenya Bankers Association) and Professor (CBK governor Njuguna Ndungu) and I have not been provided with a clear answer, that is on the reason for the high interest rates in the country.” he said.
He said the difference in many countries between the rates offered to depositors and that paid by borrowers is between 2 per cent and 3 per cent while in Kenya its is 10 per cent and upto 20 per cent.
For example, he added, that the difference in India is 4 per cent and Nigeria 5 per cent.
“Going into the next 50 years, CBK should provide us with the answer to this puzzle.
The Central Bank should do what it can to reduce rates paid to depositors and the borrowers,” Mr Ruto said.
Ruto said the country had only 20,000 mortgage takers when there should be atleast one million and Central Bank should also find way to unlock this market.
During this year’s budget the Cabinet Secretary, Mr Henry Rotich said the recent developments in the banking sector had resulted in more business activities, some of which have been found to be unethical and illegal, hence in violation of the Banking Act.
He said the Banking Act would be changed to enhance the penalties provided for the offences.
