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{
    "id": 846702,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/846702/?format=api",
    "text_counter": 229,
    "type": "speech",
    "speaker_name": "Suba South, ODM",
    "speaker_title": "Hon. John Mbadi",
    "speaker": {
        "id": 110,
        "legal_name": "John Mbadi Ng'ong'o",
        "slug": "john-mbadi"
    },
    "content": "Another effect of this proposal is that it seems to target the core of the banking liquidity management operations. It could have negative effects on liquidity distribution. It is not good to interfere with liquidity. An economy survives on liquidity operations. The moment you target the liquidity operations of the banking sector you stall the country’s economic growth. You can interfere with it in a big way. My proposal is that the Committee should introduce amendments immediately to remove that proposal from the Finance Bill so that the Bill becomes good. I also want to talk to the proposed amendments to the Banking Act or repeal of the interest rate cap. That is what used to be called “the Jude Njomo Bill”. I do not know whether to continue and call it “the Jude Njomo Act”. The practice has been that the moment a law is passed in Parliament, it ceases to be an individual’s legislation; it becomes a national legislation. As a professional, I will not shy away from saying the truth; that, probably, the interest rate cap has not realised its intended objective. The reason is not because that law is in place. The reason is simple: The Government has appetite for borrowing. If the Government has appetite for borrowing, the banks and other financial institutions have alternative people to give money to. That is why they cannot give money to the small business people wanted to encourage to borrow money at cheaper rates. They rely on the argument that these are high risk businesses. Even when the interest rate is high, the businesses become high risk businesses. I know the interest rate is supposed to compensate for high risk, it sometimes do not just make sense. Most of these businesses repay their loans. They used to repay the loans even at very high interest rates. Now that the interest rates have come down, why can they not service their loans? Because banks have found an alternative to borrow, namely the Government, they are deliberately denying Small and Medium size Enterprises (SMEs) money to scandalise the interest rate capping law. This Act had very good intentions. We are to blame, as Parliament. We need to reign in the National Treasury. We must insist that we will not allow the Government to borrow in a manner that distorts the economy and push out the private sector from the economy. Instead of repealing the interest rates cap, the National Treasury needs to put its act in order to ensure that they do not borrow much so that the small and medium size businesses, which we intended to help through this law, get that capacity. I have two more issues to quickly address. The first one is on the issue of the Employment Act. I was sharing with Hon. Omboko Milemba. We are asking employees to compulsorily contribute 0.5 of their gross pay. The practice is that people contribute money based on their basic because that is the salary. Gross salaries are usually not predictable. They are monies that can be taken away at will. We are requiring people to pay 0.5 per cent of their gross pay per month to this Fund. Why force people to contribute to a Fund that is supposed to buy houses for them or whatever it is? What happens if I do not want to buy a house? Are you forcing me to contribute? Because of the effect it is causing to employers is that they will reduce some of the benefits they give to workers so that they pay this money. Finally, I am happy that the Whip of the Minority Party is already working on an amendment on VAT charged on petroleum products. If you allow me just one minute to talk about it, I would say I have heard many people talk about VAT on petroleum products as if it is in this Finance Bill. The truth is that we passed that amendment and put petroleum products to the VAT bracket in 2013. It is only that the CS has been extending the effective date of this provision."
}