Entry Instance

HTTP 200 OK
Allow: GET, PUT, PATCH, DELETE, HEAD, OPTIONS
Content-Type: application/json
Vary: Accept

{
    "id": 956054,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/956054/?format=api",
    "text_counter": 303,
    "type": "speech",
    "speaker_name": "Seme, ODM",
    "speaker_title": "Hon. (Dr.) James Nyikal",
    "speaker": {
        "id": 434,
        "legal_name": "James Nyikal",
        "slug": "james-nyikal"
    },
    "content": " Thank you, Hon. Temporary Deputy Speaker for giving me the opportunity to speak on the Banking (Amendment) Bill. Banking is the key support system for business in this country and elsewhere. This amendment Bill seeks to find out how the banking industry can ensure that those who venture into business succeed. Business is the mainstay of any economy and the economic growth of a country because it generates income, creates employment, generates products that we can sell and get foreign exchange and provides taxes to run our systems. Businesses must be supported. The main support for businesses worldwide is credit. Credit makes it possible for businessmen and companies to run their businesses and get returns. Returns on any investment depend on the interest rate that is applied. Interest rates are the main determinants of the cost of running a business and, therefore, the returns that the businesses will bring to the investors. Therefore, if the interest rate is high, it is not possible for businessmen or companies to run their businesses and make profits, employ people, create products and pay taxes. I do not know of any business where you get such huge returns and pay back an interest of 20 per cent. You must then be running a business with a profit margin of 50 per cent. Such businesses are rare. It is, therefore, the role of the banking industry on one hand and the Government on the other hand to support businesses so that we can have economic growth. If the interest rate is such that business people cannot take loans or if they do so they cannot make any profit, then the support that the banks are supposed to provide does not make any sense. Therefore, this Bill that seeks to cap interest rates which we had passed earlier but were brought back because of minor necessary amendments is of interest. We must look at it in the context of the history of the attempts by this House to cap interest rates. We are aware of the Donde Bill. It did not get anywhere. The banking industry got together and frustrated it out of existence. We passed Hon. Njomo’s Bill, the one we are seeking to amend, in the 11th Parliament. There was word out there that the court had stopped its implementation. Luckily, the court did not stop it. It said that there was need to make amendments in order to make matters clearer. For example, if you are talking of 4 per cent interest rate capping, is it per annum or per month? I must thank the courts for that. Again, you can see very clearly that the court process was motivated by the banks, which have formed a cartel. The banks are insincere. I cannot comprehend the reasons being given by the banking industry as to the need for higher interest rates. If you have low interest rate, I do not see how people will not take loans. According to the law of supply and demand, if the interest rates are low, more people will take the loans. However, the banks turn round and say that if the interest rates are low, people will not take loans. They sit together as a cartel and bring in tough conditions that make it impossible for people to take loans. In effect, they do not give out loans because they want higher interest. They are more interested in the money they will make than businesses running. If you have a lot of The electronic version of the Official Hansard Report is for information purposes only. Acertified version of this Report can be obtained from the Hansard Editor."
}