A section of legislators have dismissed the move by banks to offer Sh30 billion to Small and Medium Enterprises (SMEs) on friendly terms as a public relations gimmick meant to hoodwink Kenyans.
The MPs, three of them from The National Alliance (TNA), said the bankers’ move is also meant to dissuade President Uhuru Kenyatta from assenting to the Bill to cap interest rates.
“We are wondering whether this is a genuine change of heart or a knee-jerk reaction to persuade the President not to assent to the Banking (Amendment) Bill,” said Kiambu Town MP Jude Njomo.
Mr Njomo is the sponsor of the Bill passed by the National Assembly two weeks ago and now awaiting the President’s signature or return to Parliament for possible preferred amendments.
He was flanked by his TNA counterparts Kimani Ichung’wa (Kikuyu) and Kareke Mbiuki (Maara) and ODM’s Abdikadir Omar Aden (Balambala) and Victor Munyaka (Machakos Town, CCU).
The lawmakers asked the President to assent to the Bill and ignore the claims by the banks that it would not be good for the economy and would result in the growth of informal, unregulated lending.
Mr Njomo said similar promises have been made over the past 20 years that MPs have been trying to get in place a law to limit the interests that banks can charge on loans.
The introduction of the Kenya Banks’ Reference Rate (KBRR) has also not had much of an impact on interest rates as promised when it was introduced, said Mr Njomo.
He said that with banks placing stringent conditions on borrowers, the SMEs that are the targets of the Sh30 billion fund would probably never get a hold of the money.
The commitment by the banks was made on Wednesday with a Memorandum amongst them handed over to Central Bank governor Dr Patrick Njoroge.
NO BASIS IN LAW
The lawmakers however argued that the MoU has no basis in law and is therefore not a reason to believe that the intended beneficiaries would get the money.
“Unless it is legislated and there are safeguards, it is not something that we can take as a genuine offer,” said Mr Njomo.
Mr Aden, the Balmbala MP, said the difference between the rates paid on deposits should not be as high as it currently is in Kenya.
“It is very ironic of commercial banks to come and say they want to give SMEs loans at friendly rates. This is proof itself that the rates you have are not friendly. Banks should just run their business ethically,” he said.
“Let the President listen to the people of Kenya. Let him not listen to a bunch of cartels. When we as the Jubilee Coalition were out there campaigning, one of the things in our manifesto was the lowering of interest rates,” Said Mr Mbiuki.
Mr Ichung’wa, the MP for Kikuyu, said the MoU by the banks would need to be anchored in the law to have any effect and be enforceable.
“We do not trust them, we cannot trust them and we cannot trust something that is not anchored in law,” said Mr Ichung’wa.