President Uhuru Kenyatta’s bid to remove a cap on commercial lending rates was passed in Parliament Tuesday following a quorum hitch, potentially boosting the flow of credit to the economy and return of expensive credit.
Speaker of the National Assembly Justin Muturi said there was no quorum to overturn the President’s order, giving Mr Kenyatta’s amendments an automatic passage.
There were only 161 lawmakers present at the time of voting on the President’s amendments, which fell below the threshold required to retain the cap on lending rates. Lawmakers required a two thirds majority - or 233 lawmakers - to overturn Mr Kenyatta’s memorandum on the amendments and retain the cap introduced in September 2016.
Mr Kenyatta had on October 18 refused to sign the Finance Bill, which proposes taxes for funding the government’s annual budget, demanding that lawmakers repeal the cap.
In the amendments to the rate cap legislation, legislators shielded existing loans from higher interest rates once the cap is repealed, meaning that only new loans will be affected by the high interest rates set to follow.
The removal of the cap looks set to expose borrowers to high lending rates, which had touched a high of 25 per cent before introduction of the ceiling, increasing the burden of servicing loans by individuals and small businesses.