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{
    "id": 1196669,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1196669/?format=api",
    "text_counter": 45,
    "type": "speech",
    "speaker_name": "Sen. Oketch Gicheru",
    "speaker_title": "",
    "speaker": null,
    "content": ", who took up space in this niche are offering their products at exorbitant interest rates averaging 4.5 per cent per month and 54 per cent per annum, therefore placing the borrowers at a great disadvantage. Needless to say, these exorbitant interest rates, in light of the prevailing economic conditions, result into default on payments and repossession of the backing collateral assets, with statistics showing that the repossession rate of motorbikes stands at approximately 50 per cent. Mr. Deputy Speaker, Sir, the repossession of collateral assets, especially in cases where at least 30 per cent of the value of the asset has been paid up, is an extremely punitive remedy. Since asset-based micro lending companies operate in a limited regulatory space, recourse for the borrower is limited, leaving a majority of struggling Kenyans at a loss. These high interest-rate loans and the punitive remedies on default only exacerbate the unemployment challenge in the country by significantly reducing net revenues to businesses and leading to closure of business in extreme cases, with the end result being that the borrowers get trapped in a vicious cycle of poverty. There is need to protect the average Kenyans that find themselves in such situations of exploitation, to align the underlying contracts to the exigencies of the state and to ethical norms. I note with concern that the strides made in the regulation of micro lenders with the enactment of the Central Bank (Amendment) Act, 2021 only empowered the Central Bank of Kenya to regulate digital credit providers. Chapter Four of the Constitution of Kenya, 2010, provides for the Bill of Rights for every Kenyan. Some of those rights include the right to human dignity, under Article 28; the right not to have their possessions seized and the right to information necessary for them to gain full benefit from goods and services provided within our borders. Amendment No.9 of 2006 of the Kenya Banking Act introduced the In duplum rule into Kenyan legislation, which provides that the sum of the interest and legal costs in respect of the outstanding debt may not exceed the initial capital amount of the contract. If the In duplum rule is applied, the running of interest stops when unpaid interest equals the outstanding capital balance and that expenses incurred in the recovery of any amounts owed by the debtor may be recovered. The Legislature is known to intervene in certain circumstances by way of legislation designed to protect Kenyans from the harsh effects of transactions induced to benefit commercial interests in disregard of the principles of social justice. I would, therefore, like to conclude by appealing to this Senate to call upon the Ministry of National Treasury and Economic Planning to-"
}