Some MPs have vowed to block President Uhuru Kenyatta's proposal to remove interest rate caps. Removing the interest cap will actually make loans cheaper, not more expensive. In theory, the cap should make loans cheaper because it says banks cannot lend at more than four percent above the Central Bank borrowing rate. The interest rate cap has penalised the ordinary borrower by forcing him to go outside the banking system and pay more. Banks have now jumped on the bandwagon and become digital lenders themselves to charge high effective interest rates.

Source: The Star October 19, 2019 01:52 UTC