Nairobi — President Uhuru Kenyatta has appealed to multinational firms to invest in Kenya, saying the country offers a conducive environment for business.
Speaking when he presided over the opening of a new state of the art business park by Japanese auto giant Toyota in Nairobi, President Kenyatta said Kenya has a huge pool of young talent whom multinationals can tap to drive their growth.
"We are encouraging other multinationals, especially those from Japan, to invest in Kenya. I can assure you, they will not regret their decision and we, on our part, will continue to appreciate them as true friends who helped us walk that long journey to becoming a middle income country," said the head of state.
He added: "Kenya has an unusually young population... With increased access to education under our various educational programs, far more of our young people are completing their courses at schools, universities, colleges and institutions of vocational training, before entering gainful employment or business."
While commending Toyota for the state-of-the-art business park, he noted that the initiative is an indication of the company's confidence in the country.
"This will complement the government's Uwezo and Youth Fund Initiatives, thus hastening employment creation and economic development," he said.
The complex hosts the Toyota Kenya Business Park, Strategic Corporate Social responsibility in Africa and Toyota Kenya Academy.
"It will also enhance technology transfer, spur employment opportunities and offer opportunities for SMEs," added Kenyatta.
Japanese ambassador to Kenya Tatsushi Terada said for Kenya to achieve its Millennium Development Goals, the country must invest in industrial human resource.
Industrialisation Cabinet secretary Adan Mohammed and his Devolution counterpart Anne Waiguru commended the company for its expansion
Meanwhile, debate continues to rage in Kenya over the prevailing high interest rates in the country in the wake of a new tool for pricing loans announced by the Central Bank of Kenya, (CBK).
Early this month CBK pegged the Kenya Banks Reference Rate (KBRR) at 9.13 per cent as the benchmark rate to guide banks in pricing loans.
Already several banks have taken the cue from the new pricing tool to slash their lending rates.
Standard Chartered (StanChart) became the first bank to slash lending rates. The bank reduced lending rates on three products (personal loans, mortgages and business loans), and set the stage for other financial institutions to follow suit.
StanChart head of retail for Kenya and East Africa Bhartesh Shah told East African Business Week the move is meant to open up banking solutions to more customers by making them more affordable and highly competitive.
"Increased consumer appetite to borrow as well as an increasingly sophisticated consumer seeking more financial options prompted the bank to open up access to credit to people who wish to borrow but are otherwise restricted by the cost of credit," said Shah
Consequently, StanChart is offering customers mortgages at 10.9 per cent, which is 1.77 per cent above KBRR, from 12.9 per cent. Personal loans are at 14.9 per cent from 17.9 per cent and business loans secured against property at 10.9 per cent from 21 per cent.
And with eyes on other banks to see whether they will follow suit, Kenya's Deputy President William Ruto this week warned that high interest rates are now locking out entrepreneurs, investors and farmers from credit.
Ruto said the government is now borrowing less so as not to crowd out the private sector, while also implementing reforms to remove finance huddles.
While addressing an agri-business forum in Nairobi, Ruto called upon all stakeholders in the financial sector to take a more assertive stance to ensure interest rates are lowered.
"How do you allow people to go and borrow money at 2.5 per cent and sell it to us at 15 per cent?" he asked. "The bottom line is this: as policy makers and technocrats, we must look each other in the eye and call a spade a spade, so as to be able to take development to the next level."
Ruto said providing cheaper credit to the right people is the only way more farmers and entrepreneurs can be brought on board to facilitate economic growth. Ruto spoke even as the chairman of the Senate committee on Finance and Economic Affairs Billow Kerrow heaped blame on the government for high interest rates in the country. Kerrow told the Senate that nearly 60 per cent of profit made by banks accrues from government securities. He said loans lent to customers only generate 42 per cent of the total profits that banks make annually, with the rest being made through Treasury bonds and bills.
"This heavy domestic borrowing by central government makes loans expensive and inaccessible to customers," he said.
Senators also blamed the Central Bank of Kenya for failing to institute proper policies to control interest rates.