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Law Capping interest rates
Rank: Veteran Joined: 10/29/2008 Posts: 1,566
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tom_boy wrote:obiero wrote: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 Nicely done article. However, it is more theoretical than practical when it comes to how banking is actually conducted. I have never gone to a bank for a loan and been told to provide certain information about myself and my intended use of the money and then based on that info. they will get back to me with the interest rate they will offer me the loan at. Certain individuals are also " risk free" in a sense but Kenyan banks categorise everyone as high risk. Goverments are not necessarilly risk free as we are well aware. Thats why we have junk bonds. So, "western economists" will always try to argue from many theoretical stand points about bank rate control. Bottom line, its all theory. None of those theoretical facts apply when the rubber meets the road, or when customer meets banker. How come we did not get fuel shortage with fuel price control. Why do banks insult our intelligence when they say they will happily lend to Wanjiku at 25% , but if we lend to her at 14%, she might default. Banks are holding the country hostage on fake pretencious economic theories that they themselves do not apply. We need the next leader to have balls of steel, stare them in the face, revamp nbk and arm twist kcb and coop into lending at 14%. Then we see what the rest will do. Dictator!, that's what it takes! Isuni yilu yi maa me muyo - ni Mbisuu
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Rank: Member Joined: 1/27/2012 Posts: 851 Location: Nairobi
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tom_boy wrote:mkeiy wrote:tom_boy wrote:obiero wrote:winston wrote:obiero wrote:Flo-ology wrote:tom_boy wrote:obiero wrote:tom_boy wrote:obiero wrote:actuarywahisa wrote:[quote=Ericsson]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...212-124shyuz/index.html[/quote] Economy continues to bleed...Sometimes we are aloof on other peoples plight (eg job losses)...until that very plight visits our door steps. Haki ya Mungu..That's true How come no one laments about the thousands who have been auctioned by banks, sometimes illegally, partly due to high interest rates that are hiked irregularly halfway through the loan term. How about the thousands that took mortgages at 15% during kibaki error then found themselves paying 22% shortly after. Who will pay them back for lost income and depression they have suffered. Point is, there are 2 sides to every coin. Lets not just focus on negatives of rate control and Yap about it all day. Rate control is a good tool to control our banks and hopefully channel capital where it will have maximum assured return. No more money for tenderpreneurs and cowboys wa kubahatisha biashara. Money should go to established businesses with ability to repay and secondly to individuals with clear ability to repay. Banks have been playing Russian roulette with us and we pick up the tab in high interest rates. Established businesses with ability to pay? Once,those big businesses with ability to pay were small start ups. Going by your reasoning, we wouldn't be having any big business now if the same had befallen them then. There are a few positives about rates cap. But the negatives are countless. Three steps forward, five steps backwards. Are we going or coming? Aren't we better sitting? Let us debate. The problem is many of the anti rate cap brigade are theory people. Which bank has EVER lent money to a startup that has no security and no big connections before they are able to demonstrate clear positive cash flow. Tell me just one instance in Kenya even at those 25% interest. Established business is not = to big business. An established business is one that is selling a good or service, customers are buying and actually paying for the items, there is a system to how the business runs and this system is expected to continue running in the forseeable future. Fly by night tenderpreneurship is not an established business. Mama mboga or mama Oliech is an established business. I hope guys can get this. Stop with many theories. Look at what is practical @tom-boy. Practical is what I do. I am in business,is that theory too? I can count from my left hand fingers to my right hand fingers,small businesses,worth 100k or so in the year 2010,are now businesses worth millions. Thanks to bank loans. Those kind of loans, are not available now Real people, real businesses. In 6 years. The ones at that stage right now,starting at 100k, ceteris paribus, cannot get even a single penny from the same banks. In 2023,after 6 years from now, how much will their businesses be worth? Mambo ya theories na tenderpreneurs toa kwa huu mjadala.
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Rank: Member Joined: 2/20/2007 Posts: 767
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mkeiy wrote:tom_boy wrote:mkeiy wrote:tom_boy wrote:obiero wrote:winston wrote:obiero wrote:Flo-ology wrote:tom_boy wrote:obiero wrote:tom_boy wrote:obiero wrote:actuarywahisa wrote:[quote=Ericsson]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...212-124shyuz/index.html[/quote] Economy continues to bleed...Sometimes we are aloof on other peoples plight (eg job losses)...until that very plight visits our door steps. Haki ya Mungu..That's true How come no one laments about the thousands who have been auctioned by banks, sometimes illegally, partly due to high interest rates that are hiked irregularly halfway through the loan term. How about the thousands that took mortgages at 15% during kibaki error then found themselves paying 22% shortly after. Who will pay them back for lost income and depression they have suffered. Point is, there are 2 sides to every coin. Lets not just focus on negatives of rate control and Yap about it all day. Rate control is a good tool to control our banks and hopefully channel capital where it will have maximum assured return. No more money for tenderpreneurs and cowboys wa kubahatisha biashara. Money should go to established businesses with ability to repay and secondly to individuals with clear ability to repay. Banks have been playing Russian roulette with us and we pick up the tab in high interest rates. Established businesses with ability to pay? Once,those big businesses with ability to pay were small start ups. Going by your reasoning, we wouldn't be having any big business now if the same had befallen them then. There are a few positives about rates cap. But the negatives are countless. Three steps forward, five steps backwards. Are we going or coming? Aren't we better sitting? Let us debate. The problem is many of the anti rate cap brigade are theory people. Which bank has EVER lent money to a startup that has no security and no big connections before they are able to demonstrate clear positive cash flow. Tell me just one instance in Kenya even at those 25% interest. Established business is not = to big business. An established business is one that is selling a good or service, customers are buying and actually paying for the items, there is a system to how the business runs and this system is expected to continue running in the forseeable future. Fly by night tenderpreneurship is not an established business. Mama mboga or mama Oliech is an established business. I hope guys can get this. Stop with many theories. Look at what is practical @tom-boy. Practical is what I do. I am in business,is that theory too? I can count from my left hand fingers to my right hand fingers,small businesses,worth 100k or so in the year 2010,are now businesses worth millions. Thanks to bank loans. Those kind of loans, are not available now Real people, real businesses. In 6 years. The ones at that stage right now,starting at 100k, ceteris paribus, cannot get even a single penny from the same banks. In 2023,after 6 years from now, how much will their businesses be worth? Mambo ya theories na tenderpreneurs toa kwa huu mjadala. In that case, if you have a real business going, it means uko na cash flow and some profit. Hang in there my brother, the banks will soon come to their senses and come looking for you. 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: New-farer Joined: 7/8/2017 Posts: 74
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Banks have to be innovative.
if i may ask these guys supporting removal of
caps.give 3 reasons how caps removal will make my business and the economy grow.
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Rank: Elder Joined: 4/22/2010 Posts: 11,522 Location: Nairobi
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mobutu123 wrote:Banks have to be innovative.
if i may ask these guys supporting removal of
caps.give 3 reasons how caps removal will make my business and the economy grow. It will make their shares appreciate.  possunt quia posse videntur
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Rank: Elder Joined: 7/11/2012 Posts: 5,222
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Loans should be at 1 or 2%! Anything above 5% is corruption. If default is their argument, then shouldn't banks reduce interest to make repayment feasible? Ours is a man-eat-man country, and if nobody looks out for ordinary mwanainchi, the bullies will have a feild day. And while we are at it, calling rates should be cents.. Whats with all these super billions reported in profits, with a Wanjiku insulted as 3rd World. Ali baba and Crypto, come restore some sanity
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Rank: New-farer Joined: 7/8/2017 Posts: 74
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@mukiri. u a spot on. hata safcom needs to be 'capped'!!
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Rank: Elder Joined: 6/23/2009 Posts: 13,503 Location: nairobi
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Mukiri wrote:Loans should be at 1 or 2%! Anything above 5% is corruption. If default is their argument, then shouldn't banks reduce interest to make repayment feasible? Ours is a man-eat-man country, and if nobody looks out for ordinary mwanainchi, the bullies will have a feild day.
And while we are at it, calling rates should be cents.. Whats with all these super billions reported in profits, with a Wanjiku insulted as 3rd World. Ali baba and Crypto, come restore some sanity That will be possible only in Utopia
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: 7/1/2009 Posts: 256
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tom_boy wrote:Monk wrote:tom_boy wrote:obiero wrote: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 Nicely done article. However, it is more theoretical than practical when it comes to how banking is actually conducted. I have never gone to a bank for a loan and been told to provide certain information about myself and my intended use of the money and then based on that info. they will get back to me with the interest rate they will offer me the loan at. Certain individuals are also " risk free" in a sense but Kenyan banks categorise everyone as high risk. Goverments are not necessarilly risk free as we are well aware. Thats why we have junk bonds. So, "western economists" will always try to argue from many theoretical stand points about bank rate control. Bottom line, its all theory. None of those theoretical facts apply when the rubber meets the road, or when customer meets banker. How come we did not get fuel shortage with fuel price control.Why do banks insult our intelligence when they say they will happily lend to Wanjiku at 25% , but if we lend to her at 14%, she might default. Banks are holding the country hostage on fake pretencious economic theories that they themselves do not apply. We need the next leader to have balls of steel, stare them in the face, revamp nbk and arm twist kcb and coop into lending at 14%. Then we see what the rest will do. Fuel shortages in Mpeketoni... http://www.the-star.co.k...amu-businesses_c1589970
 Dont use isolated incidences to prove a point you do not have. I apologise if I've upset you. You are right.
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Rank: Veteran Joined: 10/29/2008 Posts: 1,566
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mobutu123 wrote:Banks have to be innovative.
if i may ask these guys supporting removal of
caps.give 3 reasons how caps removal will make my business and the economy grow. With vibrancy in the economy your business will benefit. SMEs who are hard up would get a reprieve and spur the economy. Whatever you sell, they will begin (new customers) buying or increase (old customers) their volume of purchase. Isuni yilu yi maa me muyo - ni Mbisuu
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Rank: New-farer Joined: 5/19/2014 Posts: 68 Location: Migori
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Mukiri wrote:Loans should be at 1 or 2%! Anything above 5% is corruption. If default is their argument, then shouldn't banks reduce interest to make repayment feasible? Ours is a man-eat-man country, and if nobody looks out for ordinary mwanainchi, the bullies will have a feild day.
And while we are at it, calling rates should be cents.. Whats with all these super billions reported in profits, with a Wanjiku insulted as 3rd World. Ali baba and Crypto, come restore some sanity I only have one response for you. Start your own bank or money lending business and lend at those rates. Thank you. Learning to sit on my hands
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Rank: Elder Joined: 6/23/2009 Posts: 13,503 Location: nairobi
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ombaalbt wrote:Mukiri wrote:Loans should be at 1 or 2%! Anything above 5% is corruption. If default is their argument, then shouldn't banks reduce interest to make repayment feasible? Ours is a man-eat-man country, and if nobody looks out for ordinary mwanainchi, the bullies will have a feild day.
And while we are at it, calling rates should be cents.. Whats with all these super billions reported in profits, with a Wanjiku insulted as 3rd World. Ali baba and Crypto, come restore some sanity I only have one response for you. Start your own bank or money lending business and lend at those rates. Thank you. LOL. Truly speaking even The Land of the Free doesn't have such low rates
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: 7/11/2012 Posts: 5,222
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ombaalbt wrote:Mukiri wrote:Loans should be at 1 or 2%! Anything above 5% is corruption. If default is their argument, then shouldn't banks reduce interest to make repayment feasible? Ours is a man-eat-man country, and if nobody looks out for ordinary mwanainchi, the bullies will have a feild day.
And while we are at it, calling rates should be cents.. Whats with all these super billions reported in profits, with a Wanjiku insulted as 3rd World. Ali baba and Crypto, come restore some sanity I only have one response for you. Start your own bank or money lending business and lend at those rates. Thank you. Eish! Though if you haven't noticed, there is already a revolution slowly happening.
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Rank: Elder Joined: 7/11/2012 Posts: 5,222
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obiero wrote:ombaalbt wrote:Mukiri wrote:Loans should be at 1 or 2%! Anything above 5% is corruption. If default is their argument, then shouldn't banks reduce interest to make repayment feasible? Ours is a man-eat-man country, and if nobody looks out for ordinary mwanainchi, the bullies will have a feild day.
And while we are at it, calling rates should be cents.. Whats with all these super billions reported in profits, with a Wanjiku insulted as 3rd World. Ali baba and Crypto, come restore some sanity I only have one response for you. Start your own bank or money lending business and lend at those rates. Thank you. LOL. Truly speaking even The Land of the Free doesn't have such low rates 0.95% in Japan
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Rank: Veteran Joined: 8/28/2015 Posts: 1,247
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maka wrote:mobutu123 wrote:Banks have to be innovative.
if i may ask these guys supporting removal of
caps.give 3 reasons how caps removal will make my business and the economy grow. It will make their shares appreciate. Phew  ,Behold, a sower went forth to sow;....
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Rank: Veteran Joined: 10/29/2008 Posts: 1,566
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Ngalaka wrote:mobutu123 wrote:Banks have to be innovative.
if i may ask these guys supporting removal of
caps.give 3 reasons how caps removal will make my business and the economy grow. With vibrancy in the economy your business will benefit. SMEs who are hard up would get a reprieve and spur the economy. Whatever you sell, they will begin (new customers) buying or increase (old customers) their volume of purchase. By the way though I support the removal of rate caps as we know them to date, I do not deny that there is need to engage the banking/finance sector players in a constructive, and consultative way, that does not involve bludgeoning them into submission as seems to be the case currently. Handled meaningfully we should be able to roll out an interest rate regime that is not debilitating to the borrower, but at the same time good for the lender. While at it we must take note that interest rate for this economy is determined by factors that are unique to our economy and all that pertains to it, including CORRUPTION, which I submit is a key factor here. As such the whole issue represents one big irony of the rate cap law, as imposed by those who ought to check corruption levels – then everything else follows! Isuni yilu yi maa me muyo - ni Mbisuu
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Rank: Elder Joined: 7/23/2008 Posts: 3,017
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Ngalaka wrote:Ngalaka wrote:mobutu123 wrote:Banks have to be innovative.
if i may ask these guys supporting removal of
caps.give 3 reasons how caps removal will make my business and the economy grow. With vibrancy in the economy your business will benefit. SMEs who are hard up would get a reprieve and spur the economy. Whatever you sell, they will begin (new customers) buying or increase (old customers) their volume of purchase. By the way though I support the removal of rate caps as we know them to date, I do not deny that there is need to engage the banking/finance sector players in a constructive, and consultative way, that does not involve bludgeoning them into submission as seems to be the case currently. Handled meaningfully we should be able to roll out an interest rate regime that is not debilitating to the borrower, but at the same time good for the lender. While at it we must take note that interest rate for this economy is determined by factors that are unique to our economy and all that pertains to it, including CORRUPTION, which I submit is a key factor here. As such the whole issue represents one big irony of the rate cap law, as imposed by those who ought to check corruption levels – then everything else follows! There is nothing unique to our economy. Economics has and will always have 4 factors of production the world over. "The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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Rank: Veteran Joined: 7/5/2010 Posts: 2,061 Location: Nairobi
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Ngalaka wrote:Ngalaka wrote:mobutu123 wrote:Banks have to be innovative.
if i may ask these guys supporting removal of
caps.give 3 reasons how caps removal will make my business and the economy grow. With vibrancy in the economy your business will benefit. SMEs who are hard up would get a reprieve and spur the economy. Whatever you sell, they will begin (new customers) buying or increase (old customers) their volume of purchase. By the way though I support the removal of rate caps as we know them to date, I do not deny that there is need to engage the banking/finance sector players in a constructive, and consultative way, that does not involve bludgeoning them into submission as seems to be the case currently. Handled meaningfully we should be able to roll out an interest rate regime that is not debilitating to the borrower, but at the same time good for the lender. While at it we must take note that interest rate for this economy is determined by factors that are unique to our economy and all that pertains to it, including CORRUPTION, which I submit is a key factor here. As such the whole issue represents one big irony of the rate cap law, as imposed by those who ought to check corruption levels – then everything else follows! The big stick is the only language banks understand my fren....and that applies not just here, but in the west where finance is highly developed. That's why you hear Deutsche Bank, Goldman Sachs are fined eye watering billions when they color outside the lines. You give them an inch and banks will f*** borrowers until they can pass a melon, excuse my French.
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Rank: Member Joined: 4/14/2010 Posts: 806 Location: Nairobi
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For the pro-rate brigade, please help us understand what will force the banks to open their tight fists and lend to wanjiku under the current scenario?
1) Dwindling profits?
2) Public pressure?
3) Competition?
4) Government force (legislation)?
As long as risk-free rates on government securities are more attractive than lending at a flat rate to the borrowing public (on a risk adjusted basis)...we shall continue to wait for the banks to relent...and wait in vain.
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Rank: Member Joined: 4/14/2010 Posts: 806 Location: Nairobi
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mobutu123 wrote:Banks have to be innovative.
if i may ask these guys supporting removal of
caps.give 3 reasons how caps removal will make my business and the economy grow. Please google: The role of credit in an economy.
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