Expensive loans are set to make a come back. This follows a commitment by the National Treasury Cabinet Secretary Henry Rotich to have the law amended.
Mr. Rotich made the commitment to have the interest rate cap reviewed to the International Monetray Fund (IMF). He cited the capping of the rates as the reason why there has been a sharp shortage of loans advanced to the private sector.
This is set to come out as a victory for banks who have been accused of creating an artificial shortage in loans in a bid to force a repeal of the interest rate cap.
Since the enactment of the interest rate cap in 2016, banks have gone extremely slow in giving out loans which are supposed to be capped at 14 per cent.
The repealing of the interest rate cap is part of the contentious reforms demanded by the IMF to extend a frozen Sh153 billion ($1.5bn) emergency standby facility that expires next month.
The Central Bank of Kenya said preliminary findings of a joint study with the Treasury on the impact of the interest rate cap on growth of credit had confirmed a negative impact.
It is not clear if local banks will comply in any new efforts aimed at providing cheaper credit to Kenyans following this successful appeal.
