The International Monetary Fund is continuing to pile pressure on Kenyan authorities to remove interest rate controls.
It maintains they are harming the economy. The fund says rate caps have complicated monetary policy and severely reduced credit access for small and micro enterprises. Economists have warned that these developments threaten to reverse Kenya’s gains in financial inclusion. Private sector credit growth, as we’ve previously reported on this programme, fell to a multi-year low of 4.3% in December 2016. That’s compared to well over 17% a year earlier. Like Kenya’s banks, the IMF has been fiercely critical of the law, which came into force in September.
Industry lobby, the Kenyan Bankers’ Association warned last month it will divert more funds to Treasury bills and other opportunities in the Forex market.