Patrick Njoroge: Interest rates - why this time will be different

Article by Dr Patrick Njoroge, Governor of the Central Bank of Kenya, 20 November 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

The battle for affordable credit went into high gear with the introduction of interest rate caps on September 14, 2016. This followed long-standing concerns about the high interest rates charged by commercial banks, their poor customer service and perceived insensitivity. Three years later, the caps have been repealed and the verdict is clear-there are winners and losers. Those that had borrowed at high rates (above CBR+4 percent) had a bonanza. However, for the majority of potential borrowers and the most vulnerable, bank credit was unavailable. Micro Small and Medium-size Enterprises (MSMEs) were shut out and had to contend with shylocks at highly unfavorable terms. Certainly this did not engender shared prosperity among Kenyans.