An appropriate solution to address the high interest rates is needed, but without the collateral damage emanating from capping interest rates. This is confirmed by experiences from other countries, including in the EAC countries which have all abandoned interest rate caps, and Kenya’s own experience that led to eliminating interest rate controls in July 1991. Against this backdrop, the expectation is that caps on interest rates will provide the mwananchi with the much needed relief by reducing the burden of high rates. Bank customers face remarkably high lending rates, and at 11.4 percent spread between lending and deposit, rates are high even compared to similar countries. However, CBK has also argued that capping interest rates will have overwhelmingly negative consequences on businesses and consumers.

Source: Standard Digital August 03, 2016 08:15 UTC