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"id": 959743,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/959743/?format=api",
"text_counter": 147,
"type": "speech",
"speaker_name": "Nyaribari Chache, JP",
"speaker_title": "Hon. Richard Tong’i",
"speaker": {
"id": 2611,
"legal_name": "Richard Nyagaka Tongi",
"slug": "richard-nyagaka-tongi"
},
"content": "We have microfinance institutions. If we have to address the interest rates and the ambiguity therein, then it should apply across board. We have the mobile money facility which has destroyed Kenyan youth. I have cases of some youth I was trying to help secure some employment somewhere. They were denied employment opportunity because they are already listed as not being credit worthy. All this is because of the money being availed at their disposal without any KYC. KYC enables the creditor to appreciate the quality of the person being given the loan. The mobile money is given almost freely to the customer without any procedure, and our youth are not educated enough in terms of exposure to appreciate that a loan is not money to entertain friends, or to reward yourself for lack of a better word. They need to appreciate that it is money meant to make their lives better in terms of growing business. Until such a time we prepare our people to appreciate that a loan is a cost to them and an asset to the bank, we should discourage the practice. Therefore, whenever you borrow money, you must use it in a way that is going to create income or employment for you. It should create more money for you so that you have something for yourself and something to give out to where you have borrowed. With regard to M-PESA, if you compute the money they are charging even for the transaction, it is abnormal. If you analyse the money they are charging when you do a transaction… For example, sending Kshs5,000 to somebody will incur you a charge of above Kshs100. That is abnormal! That is a lot of money compared to what the banks are charging. It is abnormal and it is unacceptable. As I wind up - and I can see the warning is up - countries which have succeeded in matters finances have had to come up with construction banks. Look at China. Its Government has come up with a construction bank which mainly targets foreign works. Therefore, they are creating employment because of the interest rates they charge. This is not for everybody; it is meant for a given segment of a market. Maybe, it is time Kenya came up with that kind of a policy where a fund is created and controlled targeting, maybe, a given section of the market. If it is construction, we come up with that kind of policy so that our contractors are able to compete with the Chinese and foreigners in the country. At the moment, a Kenyan contractor is meant to borrow money from the market at an interest rate of about 14 per cent whereas a competitor from China is going to borrow money at an interest rate of about 1 per cent. Therefore, the undercutting in the construction industry is real. The contractors from abroad are able to compete at a higher rate than us because of the kind of rates they are getting from their market. That is another way to look at the concern of interest rates."
}