Nairobi — Industry captains cautiously favour the interest rate control even as they push for review of the Banking Act to improve access to finance, a new survey indicates.
Oxford Business Group (OBG), which surveyed 136 chief executives said 89 per cent of the interviewees expressed covert support for the interest capping law saying it had improved the cost of borrowing in the economy.
Commercial banks have, however, responded to the implementation of the Banking (Amendment) Act, 2016, which came into force on September 14 last year, by denying loans to segments they deem risky.
The law caps commercial interest rates at four percentage points above the Central Bank of Kenya's (CBK) benchmark rate. "While loans appear cheaper, borrowing is much more difficult. Last year was undoubtedly challenging for Kenya, especially its small businesses due to the tighter risk management tools implemented by lenders," OBG's regional rditor for Africa Souhir Mzali acknowledged.
OBG urged for a review of the law saying an enabling environment for Kenya's private sector and Small and Medium Enterprises (SME's) to thrive would play a crucial role in the success of the government's development pillars of manufacturing, affordable housing, healthcare and food security.
Ms Mzali said the 100 C-Suite executives drawn from across the country were optimistic that Kenya would enjoy better times ahead.
KenInvest Chairperson Ms Ann Kirima said while Kenyans experience hard times in 2017 mainly due to credit capping, drought and protracted elections, the strong business sentiment indicates a bright future.