7. Signing the bill will automatically lead to cheap credit.

Not necessarily some ramifications of the bill for instance capital flight could weaken the shilling raising the inflation and forcing CBK to raise KBRR and we would be back where we started

8. The capping rates proposed are revolutionary.

Truth is that large depositors get even more than 7% interest rates and borrow even at the same rates proposed in the bill. CBK data shows that in q1 2016 the average lending rates stood at 17.79% while deposit rate stood at 7.17%

9. Those opposing the bill are driven by baseless fear and speculation.

Truth is that signing the bill cannot replace economic theory and market fundamentals. Kenya is not the first to cap and the fears being raised are things which have actually happened where such caps exist. In any case there is hardly any country proposing the kind of monster we have proposed. Such caps go beyond 20% in countries where they exist. Closer home what happened in African countries where such tomfoolery has been experimented? Must we learn from our own mistakes? For instance in 2004 it was noted that “A recent review of credit laws in South Africa found that interest rate caps contained in the current Usury Act and Credit Agreement Act have not been effective in protecting consumers. Credit allocation has been distorted to the detriment of low-income clients. In addition, some institutions have reduced transparency on the full costs of credit for poor clients by circumventing the caps through the introduction of credit life insurance and other charges.”

10. Low interest rates will lead to high economic growth.

Interest rates are not the sole driver of GDP growth. If that were true countries such as Japan with their negative interest rates would be growing at astronomical rates. Further truth is that in Kenya formal lending does not go into consumption but into businesses. Lending to private households accounts in Q1 2016 was just 16.6% of private sector credit.