The former Central Bank of Kenya governor has commented on the interest rate capping law after the finance committee turned down a proposal from the CBK to repeal the law.
Speaking at the Commercial Bank of Africa (CBA) Economic Forum, Prof Njuguna Ndung’u said the issuance of loans relies on many issues such as the risk of premium and the cost of funds. “Loans are driven by the cost of funds and risk premium,” he said.
Other factors that contribute to the cost of credit are insurance, stamp duty, legal fees, security registration fees, valuation fees, government levies, and other third-party costs.
“There are other costs associated with loans that may not be within the lender’s purview and therefore have not been factored,” John Kirimi, CEO, Sterling Capital said.
Jeremy Ngunze, CBA’s chief executive said the government will need to form partnerships with the private sector through public-private partnerships.
“Besides financing, the private sector should bring in expertise, innovations and tested models critical for the project’s success,” Ngunze stated.
Senior government officials, economic analysts, and representatives from private sector associations also addressed the forum. The upcoming CBA Economic Forum series that will take place mid-year will discuss the national budget.