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{
    "id": 644517,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/644517/?format=api",
    "text_counter": 85,
    "type": "speech",
    "speaker_name": "Hon. Ochieng",
    "speaker_title": "",
    "speaker": {
        "id": 2955,
        "legal_name": "David Ouma Ochieng'",
        "slug": "david-ouma-ochieng"
    },
    "content": "This Bill does not address the issues that affect Kenyans today. It does not address the issues that will ensure that interest rates come down. Interest rates do not come down just because we passed a Bill that we will cap it at four per cent, offer the best rates of the Central Bank of Kenya (CBK) and fix deposits at seven per cent. More measures need to be taken. We should study the banking sector to know the problems. We need to know what is ailing the sector. We should also know if it is interest rates that are causing these problems. Why are banks charging high interest rates? It is probably because more Kenyans are defaulting because of the high interest rates. We should look for a way of handling this. We have listened to experts talking about this and I am personally impressed by the Governor of the CBK’s approach. He is willing to take measures which in his opinion, will in the long term, sort out the issue of interest rates. If you cap interest rates, then a few people at the higher end of the spectrum will not access loans because banks will now choose who will get loans. They will have to assess the risks. If you apply for a loan, it will take about four months to get it if you are a low earner. We must look at this issue holistically and look for the best method. We should understand why banks are charging high interest rates. Is it because of the cost of carrying money or a risk of defaulting borrowers? Our institutions lack the ability to enforce the rules passed. If the CBK and related institutions enforced the regulations, then we will be very far. The other law in point is the competition laws. Interest rates are high because they are fixed. This Parliament passed a law that creates the Competition Authority which has refused to get in the banking sector to investigate the person behind fixed interest rates. It does not add up to have more than 20 banks in the industry with almost the same interest rates. Banks are colluding to fix interest rates at some level, so that they do not go higher or lower than a certain percentage. A major problem in the banking industry is the issue of fixed interest rates and we should invite the Competition Authority and the Capital Markets Authority to go into the banking sector and see what is happening there. If interest rates remain fixed, tomorrow, banks will not give loans of Kshs1 million or Kshs2 million, but loans of Kshs500 million to hedge and ensure that the loans can be paid back. 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."
}