Kenya’s proposed finance sector law will ’emasculate” central bank – governor

By Reuters

A general view shows people walking past the Central Bank of Kenya headquarters building along Haile Selassie avenue in Nairobi, Kenya October 9, 2017. REUTERS/Thomas Mukoya

NAIROBI– A law proposed by Kenya’s Finance Ministry aimed at regulating the financial sector will emasculate the central bank, and fails to address a cap on commercial lending rates, the bank’s governor said on Tuesday.

Patrick Njoroge was referring to a bill published last week for review and comment by the public and industry. It says digital lenders will be licensed by a new Financial Markets Conduct Authority and bound by any interest rate caps the Authority sets.

“The bill emasculates the central bank (which).. is under attack,” Njoroge told a news conference.

The bill did not propose repealing the government’s cap on commercial lending rates, which local banks and the International Monetary Fund blame for sluggish growth in private-sector credit.

Njoroge also said lower fiscal deficit targets set by authorities would be challenging to meet, but if they were achieved it would create room for monetary easing.