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Law Capping interest rates
Rank: Member Joined: 2/20/2007 Posts: 767
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I find the below quote from Alan Greenspan instructive as we evalaute the appropriateness of interest rate caps for our market "The more credit availability expands, however, the more important financial education becomes. In this increasingly competitive and complex financial services market, it is essential that consumers acquire the knowledge that will enable them to evaluate products and services from competing providers and determine which best meet their long- and short-term needs. Like all learning, financial education is a process that should begin at an early age and continue throughout life. This cumulative process builds the skills necessary for making critical financial decisions that affect one's ability to attain the assets, such as education, property, and savings, that improve economic well-being".That to me is the key. Free access to loans for all and sundry at exorbitant rates in the name of free market is a great tragedy to our society. It enriches the banks at the expense of the financially ignorant public. It disadvantages the industrious financially savy who would not dare borrow at those high rates, yet they are the ones most capable of utilising credit to accerelate personal growth and by extension country growth. The next govt should put a lid on mobile lending and cap those rates too. We are becoming a gambling economy just because those loans are so easily available. Bankers have proved they cannot self regulate, cannot classify customers into different risk categories, so the only option is to regulate. They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
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Rank: Veteran Joined: 7/5/2010 Posts: 2,061 Location: Nairobi
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You missed more than just the comment, fren.  About Greenspan, how did that turn out? I will help you out. Greenspan's actions at the Fed directly (or indirectly, depending on who you ask) led to the subprime and CDO greed frenzy which brought about the 2008 financial meltdown. Economics is more than paper theory. Greenspan's policies looked good on paper, but failed in catastrophic fashion when banks, the same institutions you would much like to us to trust to self regulate, were given free reign. What a terrible example you have chosen to prove your point.
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Rank: Member Joined: 2/20/2007 Posts: 767
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obiero wrote:actuarywahisa wrote:Ericsson wrote:Yaani people have time to respond to tom_boy
All the best What makes tom_boy mad? Ama you'll classify me as mad as well for asking that? First, Economic theory is not a science! Secondly, why shouldn't someone respond if they are willing and have the time? I though this is a discussion forum and knowledge sharing is the spirit of Wazua. Watch out not to fall from that horse.  @tomboy raises valid but unrealistic points in Kenya's circumstances.. He must have lived abroad. Fact is that the economy started falling sick under 24 years plus of economic misrule, Mwai Kibaki took us out of the ICU and we were almost discharged, but then 2007 happened, we thus remained in the ward, but in the last four years we have ended up in the HDU.. Corruption and bad policy will ensure that very few citizens in Kenya will ever get to drive a brand new car.
Also note that land across the world is classified as an appreciating asset.. Indeed better use of the same should be encouraged but comparing land to maize simply leaves me speechless The effects of hoarding land and hoarding maize are the same. Only difference is the time span to effect. If people hoard maize, the immediate effect is starvation. When people hoard land, it leads to less access to a crucial factor of production, leads to less production, less jobs, less money to buy unga , eventually starvation. They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
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Rank: Elder Joined: 6/23/2009 Posts: 13,506 Location: nairobi
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tom_boy wrote:obiero wrote:actuarywahisa wrote:Ericsson wrote:Yaani people have time to respond to tom_boy
All the best What makes tom_boy mad? Ama you'll classify me as mad as well for asking that? First, Economic theory is not a science! Secondly, why shouldn't someone respond if they are willing and have the time? I though this is a discussion forum and knowledge sharing is the spirit of Wazua. Watch out not to fall from that horse. @tomboy raises valid but unrealistic points in Kenya's circumstances.. He must have lived abroad. Fact is that the economy started falling sick under 24 years plus of economic misrule, Mwai Kibaki took us out of the ICU and we were almost discharged, but then 2007 happened, we thus remained in the ward, but in the last four years we have ended up in the HDU.. Corruption and bad policy will ensure that very few citizens in Kenya will ever get to drive a brand new car.
Also note that land across the world is classified as an appreciating asset.. Indeed better use of the same should be encouraged but comparing land to maize simply leaves me speechless The effects of hoarding land and hoarding maize are the same. Only difference is the time span to effect. If people hoard maize, the immediate effect is starvation. When people hoard land, it leads to less access to a crucial factor of production, leads to less production, less jobs, less money to buy unga , eventually starvation. @tomboy the speculative land is normally less than half an acre, barely sufficient for subsistence farming.. Mambo ya starvation tuulize Kulalu
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Member Joined: 2/20/2007 Posts: 767
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obiero wrote:tom_boy wrote:obiero wrote:actuarywahisa wrote:Ericsson wrote:Yaani people have time to respond to tom_boy
All the best What makes tom_boy mad? Ama you'll classify me as mad as well for asking that? First, Economic theory is not a science! Secondly, why shouldn't someone respond if they are willing and have the time? I though this is a discussion forum and knowledge sharing is the spirit of Wazua. Watch out not to fall from that horse. @tomboy raises valid but unrealistic points in Kenya's circumstances.. He must have lived abroad. Fact is that the economy started falling sick under 24 years plus of economic misrule, Mwai Kibaki took us out of the ICU and we were almost discharged, but then 2007 happened, we thus remained in the ward, but in the last four years we have ended up in the HDU.. Corruption and bad policy will ensure that very few citizens in Kenya will ever get to drive a brand new car.
Also note that land across the world is classified as an appreciating asset.. Indeed better use of the same should be encouraged but comparing land to maize simply leaves me speechless The effects of hoarding land and hoarding maize are the same. Only difference is the time span to effect. If people hoard maize, the immediate effect is starvation. When people hoard land, it leads to less access to a crucial factor of production, leads to less production, less jobs, less money to buy unga , eventually starvation. @tomboy the speculative land is normally less than half an acre, barely sufficient for subsistence farming.. Mambo ya starvation tuulize Kulalu Thats not true my fren. Tembea Kite na kwingineko. What typically happens is some guy buys 100acres from some maasai fellas. Subdivides it into quarters. Sells it to hundreds of kenyans. All these kenyans buy and hoard, hoping to sell later at 100x the buying price. Now, some chinese fellow comes along. He wants 100 acres to farm commercially. Goes to kite and finds acres and acres of unoccupied land. Gets excited and tries to find out who the owner is only to discover its owned by hundreds of individuals. Gives up and goes back home. Same story in Nakuru, Naivasha and their environs. We have also large land owners who are basically hoarding land. End effect, reduced investment. They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
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Rank: Member Joined: 12/17/2016 Posts: 225
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tom_boy wrote:obiero wrote:tom_boy wrote:obiero wrote:actuarywahisa wrote:Ericsson wrote:Yaani people have time to respond to tom_boy
All the best What makes tom_boy mad? Ama you'll classify me as mad as well for asking that? First, Economic theory is not a science! Secondly, why shouldn't someone respond if they are willing and have the time? I though this is a discussion forum and knowledge sharing is the spirit of Wazua. Watch out not to fall from that horse. @tomboy raises valid but unrealistic points in Kenya's circumstances.. He must have lived abroad. Fact is that the economy started falling sick under 24 years plus of economic misrule, Mwai Kibaki took us out of the ICU and we were almost discharged, but then 2007 happened, we thus remained in the ward, but in the last four years we have ended up in the HDU.. Corruption and bad policy will ensure that very few citizens in Kenya will ever get to drive a brand new car.
Also note that land across the world is classified as an appreciating asset.. Indeed better use of the same should be encouraged but comparing land to maize simply leaves me speechless The effects of hoarding land and hoarding maize are the same. Only difference is the time span to effect. If people hoard maize, the immediate effect is starvation. When people hoard land, it leads to less access to a crucial factor of production, leads to less production, less jobs, less money to buy unga , eventually starvation. @tomboy the speculative land is normally less than half an acre, barely sufficient for subsistence farming.. Mambo ya starvation tuulize Kulalu Thats not true my fren. Tembea Kite na kwingineko. What typically happens is some guy buys 100acres from some maasai fellas. Subdivides it into quarters. Sells it to hundreds of kenyans. All these kenyans buy and hoard, hoping to sell later at 100x the buying price. Now, some chinese fellow comes along. He wants 100 acres to farm commercially. Goes to kite and finds acres and acres of unoccupied land. Gets excited and tries to find out who the owner is only to discover its owned by hundreds of individuals. Gives up and goes back home. Same story in Nakuru, Naivasha and their environs. We have also large land owners who are basically hoarding land. End effect, reduced investment. Valid points Tom_boy. Let's hope this rate cap will streamline land sector. I hear most banks are no longer financing land buying Reflection Eternal
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Rank: Elder Joined: 6/23/2009 Posts: 13,506 Location: nairobi
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Flo-ology wrote:tom_boy wrote:obiero wrote:tom_boy wrote:obiero wrote:actuarywahisa wrote:Ericsson wrote:Yaani people have time to respond to tom_boy
All the best What makes tom_boy mad? Ama you'll classify me as mad as well for asking that? First, Economic theory is not a science! Secondly, why shouldn't someone respond if they are willing and have the time? I though this is a discussion forum and knowledge sharing is the spirit of Wazua. Watch out not to fall from that horse. @tomboy raises valid but unrealistic points in Kenya's circumstances.. He must have lived abroad. Fact is that the economy started falling sick under 24 years plus of economic misrule, Mwai Kibaki took us out of the ICU and we were almost discharged, but then 2007 happened, we thus remained in the ward, but in the last four years we have ended up in the HDU.. Corruption and bad policy will ensure that very few citizens in Kenya will ever get to drive a brand new car.
Also note that land across the world is classified as an appreciating asset.. Indeed better use of the same should be encouraged but comparing land to maize simply leaves me speechless The effects of hoarding land and hoarding maize are the same. Only difference is the time span to effect. If people hoard maize, the immediate effect is starvation. When people hoard land, it leads to less access to a crucial factor of production, leads to less production, less jobs, less money to buy unga , eventually starvation. @tomboy the speculative land is normally less than half an acre, barely sufficient for subsistence farming.. Mambo ya starvation tuulize Kulalu Thats not true my fren. Tembea Kite na kwingineko. What typically happens is some guy buys 100acres from some maasai fellas. Subdivides it into quarters. Sells it to hundreds of kenyans. All these kenyans buy and hoard, hoping to sell later at 100x the buying price. Now, some chinese fellow comes along. He wants 100 acres to farm commercially. Goes to kite and finds acres and acres of unoccupied land. Gets excited and tries to find out who the owner is only to discover its owned by hundreds of individuals. Gives up and goes back home. Same story in Nakuru, Naivasha and their environs. We have also large land owners who are basically hoarding land. End effect, reduced investment. Valid points Tom_boy. Let's hope this rate cap will streamline land sector. I hear most banks are no longer financing land buying Uongo mtupu.. A good number of Kenyans have built in Kitengela.. Speculators are there but not in 100 of acres. Labda Naivasha na Nakuru. Someone who owns 100 acres in any part of Kenya, is likely not a dim fellow, especially if the proceeds aren't from corruption..
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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Central Bank of Kenya’s (CBK) policy-making committee will meet next on Monday 17th July to determine the benchmark interest rates for the next two months. http://kenyanwallstreet....l-bank-kenya-mpc-meetingWealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Veteran Joined: 11/13/2015 Posts: 1,590
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quicksand wrote:You missed more than just the comment, fren. About Greenspan, how did that turn out? I will help you out. Greenspan's actions at the Fed directly (or indirectly, depending on who you ask) led to the subprime and CDO greed frenzy which brought about the 2008 financial meltdown. Economics is more than paper theory. Greenspan's policies looked good on paper, but failed in catastrophic fashion when banks, the same institutions you would much like to us to trust to self regulate, were given free reign. What a terrible example you have chosen to prove your point. Fine then let's quote EXPLAINING AFRICAN ECONOMIC GROWTH PERFORMANCE: THE CASE OF KENYA by Francis M. Mwega and former CBK governor Njuguna Ndungu Quote: Since the population increased by 3.3% a year,
real per capita income is estimated to have fallen by 5.5% in 1974 in constant prices. This is the first
time since independence that a decline in per capita income had been recorded. It is difficult to map
out specific policies for each of the markets but the general trend was that major controls were
introduced in this period. The controls introduced in this period included: (a) selective controls on
bank lending; (b) licensing of foreign exchange transactions; (c) quota restrictions on most imports;
(d) direct price controls on goods; and (e) control on interest rates.
These controls transcended all markets and acted as an easier response in controlling balance of
payments and inflationary pressures as far as the policy makers were concerned. But these
administrative controls produced major distortions and the discretionary powers gave room to
pervasive rent-seeking activities in the public sector that has been difficult to reverse and has formed a
basis of painful adjustment process in the 1990s. In a sense, these controls prevented the development
of markets; they constrained resource movements and efficient allocations and thus growth.
Researchers and most policy makers regard the 1980s as a lost decade for growth. This is because the
easy reaction to the crises in the early 1970s prevented the policy makers from formulating and
adopting stabilization and adjustment measures and policies in the financial sector, money market and
foreign exchange transactions that could reorient the economy in the phase of severe internal and
external shocks. Like I said before there is nothing new under the sun.
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Rank: Veteran Joined: 7/5/2010 Posts: 2,061 Location: Nairobi
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wukan wrote:quicksand wrote:You missed more than just the comment, fren. About Greenspan, how did that turn out? I will help you out. Greenspan's actions at the Fed directly (or indirectly, depending on who you ask) led to the subprime and CDO greed frenzy which brought about the 2008 financial meltdown. Economics is more than paper theory. Greenspan's policies looked good on paper, but failed in catastrophic fashion when banks, the same institutions you would much like to us to trust to self regulate, were given free reign. What a terrible example you have chosen to prove your point. Fine then let's quote EXPLAINING AFRICAN ECONOMIC GROWTH PERFORMANCE: THE CASE OF KENYA by Francis M. Mwega and former CBK governor Njuguna Ndungu Quote: Since the population increased by 3.3% a year,
real per capita income is estimated to have fallen by 5.5% in 1974 in constant prices. This is the first
time since independence that a decline in per capita income had been recorded. It is difficult to map
out specific policies for each of the markets but the general trend was that major controls were
introduced in this period. The controls introduced in this period included: (a) selective controls on
bank lending; (b) licensing of foreign exchange transactions; (c) quota restrictions on most imports;
(d) direct price controls on goods; and (e) control on interest rates.
These controls transcended all markets and acted as an easier response in controlling balance of
payments and inflationary pressures as far as the policy makers were concerned. But these
administrative controls produced major distortions and the discretionary powers gave room to
pervasive rent-seeking activities in the public sector that has been difficult to reverse and has formed a
basis of painful adjustment process in the 1990s. In a sense, these controls prevented the development
of markets; they constrained resource movements and efficient allocations and thus growth.
Researchers and most policy makers regard the 1980s as a lost decade for growth. This is because the
easy reaction to the crises in the early 1970s prevented the policy makers from formulating and
adopting stabilization and adjustment measures and policies in the financial sector, money market and
foreign exchange transactions that could reorient the economy in the phase of severe internal and
external shocks. Like I said before there is nothing new under the sun. What Ndung'u did and did well was broaden financial inclusion. He allowed Mpesa and Airtel Money to pick pace and thrive by stomping on banks nefarious efforts to strangle mobile money platforms. Another excellent example of the good that controlling banks and their rapacious greed and self-interest can bring us. You, sir/madam, should stop referencing, paraphrasing and/or quoting people.... ..you are terrible at it...you mean to convey one thing but lack of depth and research into the info you are putting across leads to those arguments circling back and biting you in the ass...
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Rank: Veteran Joined: 11/13/2015 Posts: 1,590
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Rank: Veteran Joined: 7/5/2010 Posts: 2,061 Location: Nairobi
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Ara,...kumbe unatupima akili?  Haya...all the best, I hope our bickering gives you insights.
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Rank: Member Joined: 5/21/2014 Posts: 184
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Piloting: Barclays’ Sh150m kitty to fund small firms: http://www.businessdaily...25628-il0kqez/index.htmlThere are too many opportunities all around. Open your eyes and maybe you'll spot one
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Rank: Veteran Joined: 8/28/2015 Posts: 1,247
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quicksand wrote:You missed more than just the comment, fren. About Greenspan, how did that turn out? I will help you out. Greenspan's actions at the Fed directly (or indirectly, depending on who you ask) led to the subprime and CDO greed frenzy which brought about the 2008 financial meltdown. Economics is more than paper theory. Greenspan's policies looked good on paper, but failed in catastrophic fashion when banks, the same institutions you would much like to us to trust to self regulate, were given free reign. What a terrible example you have chosen to prove your point. Kudos @quicksand. Who felt the heat after all? Collapsing of the biggest American bank. Then the American Wanjiku torched family house together with vital productive human capital. Then Obamacare was born to bring some face to the faceless.then trump is ready to inahilate the desperate human capital by teaching them how to relaly on miti shamba and there no more indigenous forest to harvest the things to to release government expenditure and concentrate on capital industrial assets. Who is going to buy the product that is so expensive, Kenyans? Probably at end of a guns barrel. ,Behold, a sower went forth to sow;....
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Rank: Member Joined: 4/14/2010 Posts: 806 Location: Nairobi
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Cytonn Newsletter extract sunday 23/7/2017 (extract)
While interest rates have remained relatively stable at low levels, following the Banking (Amendment) Act 2015, private sector credit growth has continued to dip, coming in at 2.1% in May, from 3.3% recorded in March, and 20.9% registered in May 2015, as it is still better to lend to the government as the interest rates remain high on government securities, with a 5-year trading at 12.4%.
Given the current state of low lending in the economy, and that we are under a fixed-rate regime on interest rates, below are the initiatives that need to be taken to spur credit growth once again in the economy:
1. Repeal the Banking (Amendment) Act 2015, given the current regulatory framework has proved to be a hindrance to credit growth, evidenced by the continued decline of private sector credit growth, which is at 2.1% as at March 2017, compared to 5.4% when the amendment was introduced in August 2016,
2. Diversify funding sources, which will enable borrowers to tap into alternative avenues of funding that are more flexible and pocket-friendly. In more developed economies, bank funding accounts for just 40.0% of funding for businesses, yet in this market, bank funding accounts for over 95.0% of funding. Alternative sources of funding, especially capital markets based funding and competing alternative products need not only be developed but encouraged,
3. Consumer education, where borrowers are educated on how to be able to access credit, the use of collateral and establishing a strong credit history,
4. Increased transparency, in a bid to spur competitiveness in the banking sector and bring a halt to excessive fees and costs, with recent initiatives by the CBK and KBA, such as the stringent new laws and cost of credit website, being commendable initiatives, and
5. Improved and more accommodative regulation, such as the Movable Property Security Rights Bill 2017, which seeks to facilitate use of movable assets as collateral for credit facilities, allowing borrowers to use a single asset to access credit from different lenders.
While interest rates are currently at stable low levels, the risk lies in the rigid loan pricing framework that has seen the government crowd out the private sector and lock out “high risk” borrowers, with private sector credit growth now at 2.1% as at May 2017, which could end up impacting negatively on the economy because the private sector is a major job creator. Moreover, the free pricing of loans with no government interference is associated with higher credit growth, when compared to the fixed rate regime the economy is currently under.
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Rank: New-farer Joined: 5/19/2014 Posts: 68 Location: Migori
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An indepth look at interest rate capping https://t.co/5pwgLb8tbLLearning to sit on my hands
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Rank: Member Joined: 4/14/2010 Posts: 806 Location: Nairobi
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[quote=ombaalbt]An indepth look at interest rate capping https://t.co/5pwgLb8tbL[/quote] I like the parting shot. Banks should be allowed to price risk. At this point...there are 3 possible outcomes: 1) status quo. capping remains 2) modified capping 3) abandonment of capping. Ladies and gentlemen...kindly place your bets!
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Rank: Elder Joined: 6/23/2009 Posts: 13,506 Location: nairobi
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winston wrote:[quote=ombaalbt]An indepth look at interest rate capping https://t.co/5pwgLb8tbL[/quote] I like the parting shot. Banks should be allowed to price risk. At this point...there are 3 possible outcomes: 1) status quo. capping remains 2) modified capping 3) abandonment of capping. Ladies and gentlemen...kindly place your bets! That was a well done article
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Elder Joined: 6/23/2009 Posts: 13,506 Location: nairobi
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Governor Njuguna Ndungu speaks on the negative effects of the rate cap http://www.businessdaily...035034-wlaj53/index.html
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Elder Joined: 6/23/2009 Posts: 13,506 Location: nairobi
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Flo-ology wrote:tom_boy wrote:obiero wrote:tom_boy wrote:obiero wrote:actuarywahisa wrote:Ericsson wrote:Yaani people have time to respond to tom_boy
All the best What makes tom_boy mad? Ama you'll classify me as mad as well for asking that? First, Economic theory is not a science! Secondly, why shouldn't someone respond if they are willing and have the time? I though this is a discussion forum and knowledge sharing is the spirit of Wazua. Watch out not to fall from that horse. @tomboy raises valid but unrealistic points in Kenya's circumstances.. He must have lived abroad. Fact is that the economy started falling sick under 24 years plus of economic misrule, Mwai Kibaki took us out of the ICU and we were almost discharged, but then 2007 happened, we thus remained in the ward, but in the last four years we have ended up in the HDU.. Corruption and bad policy will ensure that very few citizens in Kenya will ever get to drive a brand new car.
Also note that land across the world is classified as an appreciating asset.. Indeed better use of the same should be encouraged but comparing land to maize simply leaves me speechless The effects of hoarding land and hoarding maize are the same. Only difference is the time span to effect. If people hoard maize, the immediate effect is starvation. When people hoard land, it leads to less access to a crucial factor of production, leads to less production, less jobs, less money to buy unga , eventually starvation. @tomboy the speculative land is normally less than half an acre, barely sufficient for subsistence farming.. Mambo ya starvation tuulize Kulalu Thats not true my fren. Tembea Kite na kwingineko. What typically happens is some guy buys 100acres from some maasai fellas. Subdivides it into quarters. Sells it to hundreds of kenyans. All these kenyans buy and hoard, hoping to sell later at 100x the buying price. Now, some chinese fellow comes along. He wants 100 acres to farm commercially. Goes to kite and finds acres and acres of unoccupied land. Gets excited and tries to find out who the owner is only to discover its owned by hundreds of individuals. Gives up and goes back home. Same story in Nakuru, Naivasha and their environs. We have also large land owners who are basically hoarding land. End effect, reduced investment. Valid points Tom_boy. Let's hope this rate cap will streamline land sector. I hear most banks are no longer financing land buying Tano tena? I told you that we will be finished http://www.businessdaily...5212-124shyuz/index.html
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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