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{
    "id": 507007,
    "url": "http://info.mzalendo.com/api/v0.1/hansard/entries/507007/?format=api",
    "text_counter": 360,
    "type": "speech",
    "speaker_name": "Hon. Lati",
    "speaker_title": "",
    "speaker": {
        "id": 2762,
        "legal_name": "Jonathan Lelelit Lati",
        "slug": "jonathan-lelelit-lati"
    },
    "content": "Hon. Temporary Deputy Speaker, let me start by thanking my good friend, hon. Kabando wa Kabando, for such a progressive amendment to the Central Bank Act. There is something very important here. The two amendments that hon. Kabando wa Kabando is proposing are very critical. It is very backward for us not to trade Treasury Bills and Bonds through an electronic platform at this day and age. The Central Bank of Kenya has no option, but to adapt this amendment and move very fast. This is because our country will look really backward if it is not doing electronic trading of Treasury Bonds and Bills at this day and age. The other amendment is the lowering of the minimum denomination so that Kenyans earning a low income can access this very important market of Treasury Bills and Bonds. This is a very important market because if you look at the assets classes, particularly in countries like the United States of America, Treasury Bills and Bonds are usually considered and are actually called risk-free assets. The reason why these assets are called risk-free assets is because the government is one of the best entities that can be trusted in terms of debt. Usually, government debts are risk-free because it will always meet its obligation. Even at the worst case scenario, the government has the option of printing money to pay its own Bills. Before the existence of this amendment by hon. Kabando wa Kabando, Kenyans were actually being denied the opportunity to invest in the most risk-free asset of all asset classes. So, we were basically pushing our fellow Kenyans to invest in the most risky assets, but not in the most risk-free assets we have anywhere in the world. It was very unfair and I thank the hon. Member for seeing that loophole within our asset classes and putting across this amendment. The other thing I saw in this Bill, which is really appealing, is the interest spread within different asset classes of our investment framework. If we look at the interest rates on deposits in our banks, the average interest rate is actually lower that 10 per cent. That is what Kenyans earn when they put their money in accounts in any bank across the country. On the other hand, there is no better place in the world suitable for banks than in Kenya. This is the scenario and it is mostly done by people who earn very little money in our country. They earn less than 2 per cent of their fixed deposits. Banks deposit this money in the Central Bank and usually go ahead and buy Treasury Bills and Bonds, earning about 10 per cent in interest. That is a kill because for every shilling, banks make about Kshs.8 in interest. That is even not enough. When they lend back to the public, they The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}