Interest rate capping: Will it work in Kenya?

Interest rate capping: Will it work in Kenya?

Once the law comes into force, interest rates will drop to a maximum of 14.5 per cent given the CBR’s current standing at 10.5 per cent.

By MICHAEL WACHIRA

Kenya has 42 commercial banks, but the six largest ones popularly known as Tier One control 52.4 per cent of the entire industry. This leads to only a few banks controlling the market, just like any other economy across the globe. Banks act as middlemen through whom we deposit monies and get advances and loans. They make money from the differences between the rate which they pay the depositors and the one they charge the borrower. This difference is called the interest rate spread.

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Expect a better business environment in 2016

Expect a better business environment in 2016

By GILBERT NGANGA

When President Uhuru Kenyatta officially commissioned the KSh4.8 billion English Point Marina on January 12, many investors and analysts saw it as a signal that Kenya’s tourism sector was on the verge of gaining back its lost glory.

It would not have come at a better time than the beginning of the year when investors are looking for clues on the direction the Kenyan economy will take in 2016.

The magnitude of the project — a luxury yatch facility — not only puts Kenya squarely on the global tourism map, but also is a sign that investors are keen to pump in billions of dollars into the country.

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What single digit lending rate means to our economy

What single digit lending rate means to our economy

Lower interest rates make it cheaper to borrow and this encourages spending and investment leading to higher aggregate demand and economic growth.

By ROBA ADAN

The Consumer Federation of Kenya moved to the Supreme Court in 2011 seeking a reversal of a decision that removed controls on interest rates under a legal amendment in 2000. The controls had been imposed through the Central Bank of Kenya (Amendment) Bill 2000, popularly known as the Donde Act after former Gem MP Joe Donde successfully moved the proposals in Parliament. On the other hand, the law specified that the deposit rate was also supposed to be no less than four percentage points below the prevailing T-bill rate. The clauses were meant to stop profiteering by banks at the expense of firms and individuals who were then in financial distress and were being declared bankrupt.

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Is Africa a Sleeping Giant?

Is Africa a Sleeping Giant?

By JOSEPH MUTHAMA

For the last couple of centuries, Africa has undergone an astounding metamorphosis from pre-colonial to post-colonial. Although the European colonialists received a barrage of criticism for their authoritative, dictatorial and brutal leadership, it is an inalienable fact that Africa owes them a debt of gratitude for bringing education, Christianity, advanced technology, modern infrastructure and other goodies. Despite political, economic and social turmoil that have bedeviled this vast continent for decades, Africa is one of the fastest growing continent in the world.

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