18 August 2003
Nairobi — Over the past decade, Kenya's economy has performed unfavourably for the business community and others whose operations rely on bank loans.
Those who borrowed loans have had to bear with high interest rates and excessive and punitive charges; properties used as security are often auctioned at below the reserve price or forced sale value. This, in addition to unjustifiable high auctioneer fees and advocates' costs. Few loans are restructured or written off.
Given these retrogressive features, it is high time that we sought a homegrown solution.
I suggest that banks or other lenders give a second chance to the businessmen by rescheduling their loans. The banks should also consider giving these borrowers a new facility to boost their businesses, using the same security that is now of more value than the amount involved in the old restructured loan.
Such an approach would ensure that businesses survive hard times and speculators do not buy for a song properties in which the owners invested heavily.
Banks and other lenders need to wisen up to the fact that short-cut solutions to business problems will backfire in the long run, leading to them paying damages, cancellation of irregularly transferred title deeds and tainting their reputation to the point of going out of business.
Thus, commercial disputes are best settled if arbitrated upon rather than through courts, whose officers are not skilled in business issues.
WILSON K. KITUR
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