NAIROBI, March 16 (Xinhua) -- Kenya plans to unveil a raft of measures to improve access to credit for small and medium enterprises (SMEs), a senior government official said on Friday.
Henry Rotich, Cabinet Secretary in the National Treasury, told a media briefing in Nairobi that interest rate caps on loans that were introduced in 2016 have led to sharp decline in the amount of credit available for small firms.
"The Treasury will unveil a package of measures as the part of the finance bill 2018 to ensure that credit is affordable," Rotich said.
"We expect support from both parliament and the general public on the measures that we will announce," he added.
In August 2016, the East Africa nation capped interest rate on commercial loans to four percentage points above the central bank rate with an aim of making loans affordable.
"However, the law has had the opposite effects as SMEs which are perceived to have a high loan default rate have been locked out of loans," Rotich said.
"We are looking for a substitute to the interest rate caps as consumers are suffering," he added. Rotich said the interest rate law was put in place to tame the high interest rates on commercial loans.
"The government's aim was to protect consumers from exploitation from financial institutions who lent money at exorbitant rates," he added.
Rotich said the proposed measures to expand access to credit will also address common consumer complaints that resulted from a liberalized lending regime.