The time to cap interest rates is right now

The agitation for the capping of interest rates began more than 20 years ago.

The reason was, as it is now, that high interest rates suffocate not only enterprise but also innovation.

The response by its opponents has always been an emphatic and sharp No. They have stated that it is against basic economic principles of supply and demand.

Let the market forces regulate the rates, they asserted. The result is that interest rates continued to rise.

Former Gem MP Joe Donde tried to intervene with the now famous Donde Bill that was designed to peg interest rates to reasonable market levels.

However, the traditional opponents won and the Bill never to saw the light of day.

Interest rates have surged to unprecedented levels, bringing many businesses to their knees while national and international banking corporations laughed all the way to their coffers.

The situation necessitated yet another gallant attempt by the current Gem MP, Mr Jakoyo Midiwo, to bring the interest rates under reasonable management.

The Midiwo Bill, like the one before it, was similarly demolished by lobbyists and the usual interest groups.

And now the Jude Njomo Bill is being accorded the same contemptuous treatment by lobbyists and a small economically privileged class.

'MARKET FORCES'

For more than 20 years, these market forces have reigned. What has been the result?

Interest rates have continued to go up instead of down and banks’ profits have continued to soar in the bleak Kenyan skies while the Central Bank of Kenya and the Treasury watched helplessly.

Meanwhile, in inverse proportion, Kenyan businesses and industries have continued to collapse due to high interest charges.

The ripple effect has been increased levels of unemployment, desperation, and disaffection.

The people have become poor and desperate, thanks to the high interest rates, hidden charges, penalties, and other fees. The public interest has not been served.

Most of the population has been rendered economically powerless by the greed of a few.

Many young enterprising and innovative Kenyans have been excluded from the financial market and the country is the worse for it.

An economic experiment and theory that serves the interest of only a small section of society is wrong and should be abandoned.

The argument that market forces will tame interest rates has been a dismal failure. It is time to pronounce its death and write its obituary.

The government introduced credit reference bureaus mainly to serve creditworthy persons and create a bank of information for positive use by credit institutions to enable them to give credit more widely and help to bring down the rate of interest.

However, the bureaus have long ceased to play this role. They have become weapons of defamation and threats on customers.

Banks are now using them to scare their customers into blind compliance for questioning banking operations and practices.

What this country needs is a financial services ombudsman to whom customers can channel their grievances and expect action against errant banks.

This office works very effectively and efficiently in Britain. It is time it was introduced in Kenya.

It is time that patriotic leadership in this country called the bluff of lobbyists and the greedy interest groups and cartels and all the scaremongers and told them that their time was up and their theory has failed the test of time.

The energy sector is running smoothly, thanks to the Energy Regulatory Commission, which has tamed the hitherto voracious oil merchants.

There is no reason a similar system cannot be introduced in the financial sector.

It is good and wise leadership to sacrifice private personal interest for the public good.

This sacrifice endures forever. Kenyans are hopeful that reason and a sense of patriotism will prevail to give the Njomo Bill the note it deserves.

It is time the public good was allowed to prevail over gluttonous private privilege.

The author is an advocate of the High Court specialising in commercial law. [email protected].