Wazua
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Law Capping interest rates
Rank: Veteran Joined: 7/5/2010 Posts: 2,061 Location: Nairobi
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Obi 1 Kanobi wrote:http://www.businessdailyafrica.com/corporate/companies/KQ-debt-swap-reveals-bank-loans-pricing/4003102-4039986-ibk77b/index.html
How did this 11 banks arrive at different risk prices for their KQ loans.
Doesn't look like any analysis was carried out. Seems most banks just lend to this supposed large corporates at whichever rates the corporates want.
Ironic, isn't it? What seemed like a sure bet will cause them a world of hurt cause they will have to eat this debt swap thing while good borrowers, with stable jobs, security and proven track record of prompt payment of loans previous cannot even get a millimeter of concession in the rate. Everybody gets hit with a high, blanket rate. How lazy are these people? Even now most banks will do the bare minimum for the retail customer, regardless of credit profile, and that is why they lend at the highest possible rate allowed by the law,..14%. Innovation would be banks picking their best and safest customers and offering them very attractive packages, lower than the ceiling, with incentives for faster repayment and make more profit from volume. I imagine the bank that starts doing this will steal a march on the other banks. But noooo, paying rogue reporters and financial mercenaries to keep churning fluff pieces and moaning like petulant children is the way our illustrious bankers have chosen to take. They have chosen to buck business sense, in the hope that sticking together in oligopolistic ar***ole-ness they will arm twist govt to reverse itself and its back to fat-profits-for-very little-work.
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Rank: Elder Joined: 7/23/2008 Posts: 3,017
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mkeiy wrote:Obi 1 Kanobi wrote:mkeiy wrote:Obi 1 Kanobi wrote: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. @Obi. Are you sure about that? Example; In Matata business, that 50bob to cops, under which of the 'traditional 4 factors' does that fall under? Which factor of production collects rent, that's the factor that bribe collection belongs to(the 4 factors are meant to display economic theory in its simplest form) . The point that I am trying to make is that we as a country are not unique in any way. Our greatest challenge as a country is leadership/management skills (which happens to be the most important) and we try to explain it away as uniqueness or special circumstances etc. managerial skills @Obi. Your argument was there's nothing unique about Kenyan business environment. Now you're shifting to managerial skills. In another post you talked of credit history & how they use that in the UK, a guy who sold his camels in Moyale, has about one million running a small business for 6 months in need of a loan of 500k,using your UK risk rating, what credit history do you use? Kenya is not United Kingdom. Do PSV's in the UK pay 50 bob to boys in blue every trip? Now, if a matatu guy in Kenya & bus operator in the UK were to apply for loans, are the risks same? How/why? Avoid theories,give practical answers. I stated that Kenya's weakness is a lack of or poor managerial skills which is one of the 4 factors of production (entrepreneurship). If a camel owner in Moyale wants a loan, he can be appraised by banks in Moyale based on several metrics including his camel herd size which can be used as security and how to recover the security, his account balance movement, why he wants the 500K loan yet he just made 1 million from camel sales, what he wants the money for, whether he has applied for a loan previously and did he pay etc. there are many metrices one can consider, its just common sense really. The country risks are not the same and thats basic risk analysis, other than that the business risks as much as they have similarities are pretty much the same. The 50 bob bribe is paid by every matatu in the market in kenya so I am sure matatu operators already factor it in their pricing and cashflows. "The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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Rank: Member Joined: 1/27/2012 Posts: 851 Location: Nairobi
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Obi 1 Kanobi wrote:
I stated that Kenya's weakness is a lack of or poor managerial skills which is one of the 4 factors of production (entrepreneurship).
If a camel owner in Moyale wants a loan, he can be appraised by banks in Moyale based on several metrics including his camel herd size which can be used as security and how to recover the security, his account balance movement, why he wants the 500K loan yet he just made 1 million from camel sales, what he wants the money for, whether he has applied for a loan previously and did he pay etc. there are many metrices one can consider, its just common sense really.
The country risks are not the same and thats basic risk analysis, other than that the business risks as much as they have similarities are pretty much the same. The 50 bob bribe is paid by every matatu in the market in kenya so I am sure matatu operators already factor it in their pricing and cashflows.
@Obi. If you know country risks are not the same, why are you comparing Kenya to UK? In Kenya,next week there won't be biz. Does such risk exist in the UK? How many businesses will suffer? How do banks see it? I forgot to mention, the Moyale guy sold his camels & now doing biz in Nairobi. With about 1 million, done biz for just over 6 months. Now needs 500k loan to exploit an opportunity interconnected with his small biz. He's never taken a loan before,okoa jahazi, bank or otherwise. What credit history will the banks use in order for him to qualify as potentially, a good borrower?
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Rank: New-farer Joined: 10/16/2014 Posts: 33
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quicksand wrote:Obi 1 Kanobi wrote:http://www.businessdailyafrica.com/corporate/companies/KQ-debt-swap-reveals-bank-loans-pricing/4003102-4039986-ibk77b/index.html
How did this 11 banks arrive at different risk prices for their KQ loans.
Doesn't look like any analysis was carried out. Seems most banks just lend to this supposed large corporates at whichever rates the corporates want.
Ironic, isn't it? What seemed like a sure bet will cause them a world of hurt cause they will have to eat this debt swap thing while good borrowers, with stable jobs, security and proven track record of prompt payment of loans previous cannot even get a millimeter of concession in the rate. Everybody gets hit with a high, blanket rate. How lazy are these people? Even now most banks will do the bare minimum for the retail customer, regardless of credit profile, and that is why they lend at the highest possible rate allowed by the law,..14%. Innovation would be banks picking their best and safest customers and offering them very attractive packages, lower than the ceiling, with incentives for faster repayment and make more profit from volume. I imagine the bank that starts doing this will steal a march on the other banks. But noooo, paying rogue reporters and financial mercenaries to keep churning fluff pieces and moaning like petulant children is the way our illustrious bankers have chosen to take. They have chosen to buck business sense, in the hope that sticking together in oligopolistic ar***ole-ness they will arm twist govt to reverse itself and its back to fat-profits-for-very little-work. Couldn't agree more!!! The best way forward without much pseudo analysis by so called experts painting an all doom and gloom picture. 7% spread is enough for banks to play around with and still make a fortune
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Rank: Elder Joined: 6/23/2009 Posts: 13,472 Location: nairobi
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dpmungai wrote:quicksand wrote:Obi 1 Kanobi wrote:http://www.businessdailyafrica.com/corporate/companies/KQ-debt-swap-reveals-bank-loans-pricing/4003102-4039986-ibk77b/index.html
How did this 11 banks arrive at different risk prices for their KQ loans.
Doesn't look like any analysis was carried out. Seems most banks just lend to this supposed large corporates at whichever rates the corporates want.
Ironic, isn't it? What seemed like a sure bet will cause them a world of hurt cause they will have to eat this debt swap thing while good borrowers, with stable jobs, security and proven track record of prompt payment of loans previous cannot even get a millimeter of concession in the rate. Everybody gets hit with a high, blanket rate. How lazy are these people? Even now most banks will do the bare minimum for the retail customer, regardless of credit profile, and that is why they lend at the highest possible rate allowed by the law,..14%. Innovation would be banks picking their best and safest customers and offering them very attractive packages, lower than the ceiling, with incentives for faster repayment and make more profit from volume. I imagine the bank that starts doing this will steal a march on the other banks. But noooo, paying rogue reporters and financial mercenaries to keep churning fluff pieces and moaning like petulant children is the way our illustrious bankers have chosen to take. They have chosen to buck business sense, in the hope that sticking together in oligopolistic ar***ole-ness they will arm twist govt to reverse itself and its back to fat-profits-for-very little-work. Couldn't agree more!!! The best way forward without much pseudo analysis by so called experts painting an all doom and gloom picture. 7% spread is enough for banks to play around with and still make a fortune 7% is too narrow boss.. Unless massive layoffs are effected. Bankers salary are the root of these issues
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Elder Joined: 7/23/2008 Posts: 3,017
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mkeiy wrote:Obi 1 Kanobi wrote:
I stated that Kenya's weakness is a lack of or poor managerial skills which is one of the 4 factors of production (entrepreneurship).
If a camel owner in Moyale wants a loan, he can be appraised by banks in Moyale based on several metrics including his camel herd size which can be used as security and how to recover the security, his account balance movement, why he wants the 500K loan yet he just made 1 million from camel sales, what he wants the money for, whether he has applied for a loan previously and did he pay etc. there are many metrices one can consider, its just common sense really.
The country risks are not the same and thats basic risk analysis, other than that the business risks as much as they have similarities are pretty much the same. The 50 bob bribe is paid by every matatu in the market in kenya so I am sure matatu operators already factor it in their pricing and cashflows.
@Obi. If you know country risks are not the same, why are you comparing Kenya to UK? In Kenya,next week there won't be biz. Does such risk exist in the UK? How many businesses will suffer? How do banks see it? I forgot to mention, the Moyale guy sold his camels & now doing biz in Nairobi. With about 1 million, done biz for just over 6 months. Now needs 500k loan to exploit an opportunity interconnected with his small biz. He's never taken a loan before,okoa jahazi, bank or otherwise. What credit history will the banks use in order for him to qualify as potentially, a good borrower? I think this is where the problem lies, the person in your example has no credit history and as such should be treated as a person with no credit history and get little or no loans just yet. If banks in Kenya approached him as analytically as banks in other places in the world do their customers, then the person in your example would not qualify for the 500K loan based on your limited facts. Why don't you give a more practical example, say a business in Nairobi, you are complicating a simple analysis by talking about a person in moyale selling camels yet we all know muslims don't borrow money, moyale is 1,000Kms from Nairobi etc and your example is not representative of an average kenyan borrower. "The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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Rank: Elder Joined: 6/23/2009 Posts: 13,472 Location: nairobi
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Obi 1 Kanobi wrote:mkeiy wrote:Obi 1 Kanobi wrote:
I stated that Kenya's weakness is a lack of or poor managerial skills which is one of the 4 factors of production (entrepreneurship).
If a camel owner in Moyale wants a loan, he can be appraised by banks in Moyale based on several metrics including his camel herd size which can be used as security and how to recover the security, his account balance movement, why he wants the 500K loan yet he just made 1 million from camel sales, what he wants the money for, whether he has applied for a loan previously and did he pay etc. there are many metrices one can consider, its just common sense really.
The country risks are not the same and thats basic risk analysis, other than that the business risks as much as they have similarities are pretty much the same. The 50 bob bribe is paid by every matatu in the market in kenya so I am sure matatu operators already factor it in their pricing and cashflows.
@Obi. If you know country risks are not the same, why are you comparing Kenya to UK? In Kenya,next week there won't be biz. Does such risk exist in the UK? How many businesses will suffer? How do banks see it? I forgot to mention, the Moyale guy sold his camels & now doing biz in Nairobi. With about 1 million, done biz for just over 6 months. Now needs 500k loan to exploit an opportunity interconnected with his small biz. He's never taken a loan before,okoa jahazi, bank or otherwise. What credit history will the banks use in order for him to qualify as potentially, a good borrower? I think this is where the problem lies, the person in your example has no credit history and as such should be treated as a person with no credit history and get little or no loans just yet. If banks in Kenya approached him as analytically as banks in other places in the world do their customers, then the person in your example would not qualify for the 500K loan based on your limited facts. Why don't you give a more practical example, say a business in Nairobi, you are complicating a simple analysis by talking about a person in moyale selling camels yet we all know muslims don't borrow money, moyale is 1,000Kms from Nairobi etc and your example is not representative of an average kenyan borrower. Yenyewe that Moyale example is shaky
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Member Joined: 1/27/2012 Posts: 851 Location: Nairobi
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Obi 1 Kanobi wrote:mkeiy wrote:Obi 1 Kanobi wrote:
I stated that Kenya's weakness is a lack of or poor managerial skills which is one of the 4 factors of production (entrepreneurship).
If a camel owner in Moyale wants a loan, he can be appraised by banks in Moyale based on several metrics including his camel herd size which can be used as security and how to recover the security, his account balance movement, why he wants the 500K loan yet he just made 1 million from camel sales, what he wants the money for, whether he has applied for a loan previously and did he pay etc. there are many metrices one can consider, its just common sense really.
The country risks are not the same and thats basic risk analysis, other than that the business risks as much as they have similarities are pretty much the same. The 50 bob bribe is paid by every matatu in the market in kenya so I am sure matatu operators already factor it in their pricing and cashflows.
@Obi. If you know country risks are not the same, why are you comparing Kenya to UK? In Kenya,next week there won't be biz. Does such risk exist in the UK? How many businesses will suffer? How do banks see it? I forgot to mention, the Moyale guy sold his camels & now doing biz in Nairobi. With about 1 million, done biz for just over 6 months. Now needs 500k loan to exploit an opportunity interconnected with his small biz. He's never taken a loan before,okoa jahazi, bank or otherwise. What credit history will the banks use in order for him to qualify as potentially, a good borrower? I think this is where the problem lies, the person in your example has no credit history and as such should be treated as a person with no credit history and get little or no loans just yet. If banks in Kenya approached him as analytically as banks in other places in the world do their customers, then the person in your example would not qualify for the 500K loan based on your limited facts.
Why don't you give a more practical example, say a business in Nairobi, you are complicating a simple analysis by talking about a person in moyale selling camels yet we all know muslims don't borrow money, moyale is 1,000Kms from Nairobi etc and your example is not representative of an average kenyan borrower. @Obi. I stick to my example, you give yours. For a start, not all people from Moyale are Muslims. Know your stuff. Secondly, the example I am sticking to, is a true story,here in Nairobi. I wanted to use the extreme. Thirdly, the guy got a loan of the 500k 6 years ago after coming to Nairobi & doing business for about 8 months before applying for that loan. His biz has grown & he's stable now. Doesn't need loans. What I am demonstrating is, in Kenya, the credit history you are claiming should be used, doesn't exist in the first place,for most of the business people who need loans. Whilst in the First World, it does. What has been happening in Kenya(since you guys seem to have been away) until the rates cap was, after banking with a certain bank for over six months, they would look at your statement, assess your business by visiting and if they are satisfied, they lend you.. ..I know tens of people who've grown financially that way,running different types of businesses. Hardware, Matata, mtumba etc. Since rates cap, banks chose to keep their money stifling economic growth. @Obi. Be practical. Mama mboga, hardware guy, mtumba dealer, Matata guy, all starting up, one year in business. What credit history do you suggest the banks should use? How is this credit history earned? By your reasoning, no credit history, no loans. Forever.
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Rank: Elder Joined: 7/23/2008 Posts: 3,017
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mkeiy wrote:Obi 1 Kanobi wrote:mkeiy wrote:Obi 1 Kanobi wrote:
I stated that Kenya's weakness is a lack of or poor managerial skills which is one of the 4 factors of production (entrepreneurship).
If a camel owner in Moyale wants a loan, he can be appraised by banks in Moyale based on several metrics including his camel herd size which can be used as security and how to recover the security, his account balance movement, why he wants the 500K loan yet he just made 1 million from camel sales, what he wants the money for, whether he has applied for a loan previously and did he pay etc. there are many metrices one can consider, its just common sense really.
The country risks are not the same and thats basic risk analysis, other than that the business risks as much as they have similarities are pretty much the same. The 50 bob bribe is paid by every matatu in the market in kenya so I am sure matatu operators already factor it in their pricing and cashflows.
@Obi. If you know country risks are not the same, why are you comparing Kenya to UK? In Kenya,next week there won't be biz. Does such risk exist in the UK? How many businesses will suffer? How do banks see it? I forgot to mention, the Moyale guy sold his camels & now doing biz in Nairobi. With about 1 million, done biz for just over 6 months. Now needs 500k loan to exploit an opportunity interconnected with his small biz. He's never taken a loan before,okoa jahazi, bank or otherwise. What credit history will the banks use in order for him to qualify as potentially, a good borrower? I think this is where the problem lies, the person in your example has no credit history and as such should be treated as a person with no credit history and get little or no loans just yet. If banks in Kenya approached him as analytically as banks in other places in the world do their customers, then the person in your example would not qualify for the 500K loan based on your limited facts.
Why don't you give a more practical example, say a business in Nairobi, you are complicating a simple analysis by talking about a person in moyale selling camels yet we all know muslims don't borrow money, moyale is 1,000Kms from Nairobi etc and your example is not representative of an average kenyan borrower. @Obi. I stick to my example, you give yours. For a start, not all people from Moyale are Muslims. Know your stuff. Secondly, the example I am sticking to, is a true story,here in Nairobi. I wanted to use the extreme. Thirdly, the guy got a loan of the 500k 6 years ago after coming to Nairobi & doing business for about 8 months before applying for that loan. His biz has grown & he's stable now. Doesn't need loans. What I am demonstrating is, in Kenya, the credit history you are claiming should be used, doesn't exist in the first place,for most of the business people who need loans. Whilst in the First World, it does. What has been happening in Kenya(since you guys seem to have been away) until the rates cap was, after banking with a certain bank for over six months, they would look at your statement, assess your business by visiting and if they are satisfied, they lend you.. ..I know tens of people who've grown financially that way,running different types of businesses. Hardware, Matata, mtumba etc. Since rates cap, banks chose to keep their money stifling economic growth. @Obi. Be practical. Mama mboga, hardware guy, mtumba dealer, Matata guy, all starting up, one year in business. What credit history do you suggest the banks should use? How is this credit history earned? By your reasoning, no credit history, no loans. Forever. Aah, now I see the problem. Maybe I need to define what I mean by credit history. Take credit history to include financial history of a borrower. Every first time borrower will not have a credit history as they have never borrowed, that does not mean they will not qualify for a loan, however, they should qualify for a lower amount than a seasoned borrower who has paid 3 previous loans successfully and is now applying for his fourth loan (assuming same cashflows). The same would apply for two people saving different proportions of their incomes. I hope that now settles this. "The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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Rank: Veteran Joined: 10/29/2008 Posts: 1,566
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When sincerity issues are thrown into the mix, the result can only be a farce. Isuni yilu yi maa me muyo - ni Mbisuu
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Rank: Elder Joined: 4/22/2010 Posts: 11,522 Location: Nairobi
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I will tell you guys a story let me sort something first with CBA... possunt quia posse videntur
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Rank: Member Joined: 2/20/2007 Posts: 767
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Obi 1 Kanobi wrote:mkeiy wrote:Obi 1 Kanobi wrote:mkeiy wrote:Obi 1 Kanobi wrote:
I stated that Kenya's weakness is a lack of or poor managerial skills which is one of the 4 factors of production (entrepreneurship).
If a camel owner in Moyale wants a loan, he can be appraised by banks in Moyale based on several metrics including his camel herd size which can be used as security and how to recover the security, his account balance movement, why he wants the 500K loan yet he just made 1 million from camel sales, what he wants the money for, whether he has applied for a loan previously and did he pay etc. there are many metrices one can consider, its just common sense really.
The country risks are not the same and thats basic risk analysis, other than that the business risks as much as they have similarities are pretty much the same. The 50 bob bribe is paid by every matatu in the market in kenya so I am sure matatu operators already factor it in their pricing and cashflows.
@Obi. If you know country risks are not the same, why are you comparing Kenya to UK? In Kenya,next week there won't be biz. Does such risk exist in the UK? How many businesses will suffer? How do banks see it? I forgot to mention, the Moyale guy sold his camels & now doing biz in Nairobi. With about 1 million, done biz for just over 6 months. Now needs 500k loan to exploit an opportunity interconnected with his small biz. He's never taken a loan before,okoa jahazi, bank or otherwise. What credit history will the banks use in order for him to qualify as potentially, a good borrower? I think this is where the problem lies, the person in your example has no credit history and as such should be treated as a person with no credit history and get little or no loans just yet. If banks in Kenya approached him as analytically as banks in other places in the world do their customers, then the person in your example would not qualify for the 500K loan based on your limited facts.
Why don't you give a more practical example, say a business in Nairobi, you are complicating a simple analysis by talking about a person in moyale selling camels yet we all know muslims don't borrow money, moyale is 1,000Kms from Nairobi etc and your example is not representative of an average kenyan borrower. @Obi. I stick to my example, you give yours. For a start, not all people from Moyale are Muslims. Know your stuff. Secondly, the example I am sticking to, is a true story,here in Nairobi. I wanted to use the extreme. Thirdly, the guy got a loan of the 500k 6 years ago after coming to Nairobi & doing business for about 8 months before applying for that loan. His biz has grown & he's stable now. Doesn't need loans. What I am demonstrating is, in Kenya, the credit history you are claiming should be used, doesn't exist in the first place,for most of the business people who need loans. Whilst in the First World, it does. What has been happening in Kenya(since you guys seem to have been away) until the rates cap was, after banking with a certain bank for over six months, they would look at your statement, assess your business by visiting and if they are satisfied, they lend you.. ..I know tens of people who've grown financially that way,running different types of businesses. Hardware, Matata, mtumba etc. Since rates cap, banks chose to keep their money stifling economic growth. @Obi. Be practical. Mama mboga, hardware guy, mtumba dealer, Matata guy, all starting up, one year in business. What credit history do you suggest the banks should use? How is this credit history earned? By your reasoning, no credit history, no loans. Forever. Aah, now I see the problem. Maybe I need to define what I mean by credit history. Take credit history to include financial history of a borrower. Every first time borrower will not have a credit history as they have never borrowed, that does not mean they will not qualify for a loan, however, they should qualify for a lower amount than a seasoned borrower who has paid 3 previous loans successfully and is now applying for his fourth loan (assuming same cashflows). The same would apply for two people saving different proportions of their incomes. I hope that now settles this. Using this Moyale guy example, a sensible banking system would award him a loan say at 20%. If he pays without issues, his next loan should be cheaper etc etc until he gets to the best available rate for his circumstances. In Kenya, banks treat everyone the same. Thats why rate cap had to come in and its good. 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: 10/29/2008 Posts: 1,566
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tom_boy wrote:
Using this Moyale guy example, a sensible banking system would award him a loan say at 20%. If he pays without issues, his next loan should be cheaper etc etc until he gets to the best available rate for his circumstances. In Kenya, banks treat everyone the same. Thats why rate cap had to come in and its good.
Salaala, Isn't that contradictory of your long running position. With the rate caps, Banks can only lend such a person at a maximum of 14% or decline altogether. In most cases they are opting on NOT lending to such a person at all! Isuni yilu yi maa me muyo - ni Mbisuu
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Rank: Member Joined: 2/20/2007 Posts: 767
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Ngalaka wrote:tom_boy wrote:
Using this Moyale guy example, a sensible banking system would award him a loan say at 20%. If he pays without issues, his next loan should be cheaper etc etc until he gets to the best available rate for his circumstances. In Kenya, banks treat everyone the same. Thats why rate cap had to come in and its good.
Salaala, Isn't that contradictory of your long running position. With the rate caps, Banks can only lend such a person at a maximum of 14% or decline altogether. In most cases they are opting on NOT lending to such a person at all!  kweli kuelewa kizungu ni ngumu 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: 7/22/2008 Posts: 2,695
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Setting interest rates and assessing risk is very hard without data. In the a place like the US there is plenty of data to work with because of the reporting system using the social Security number that tracks everything.
You provide the number every time you rent a house, get utility connection like power and water, buy insurance, buy a car, get a credit card, borrow a loan etc.
There is therefore plenty of information to work with even before you have borrowed any money because if you have failed to pay your electricity or water bill or even rent it shows up.
This system works to provide a lot of information for businesses etc but on the flip side you feel like you are constantly being monitored. Even information like how frequently you use the ATM and what amounts you withdraw is known and probably being used to give a profile of who you are.
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Rank: Veteran Joined: 10/29/2008 Posts: 1,566
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tom_boy wrote:Ngalaka wrote:tom_boy wrote:
Using this Moyale guy example, a sensible banking system would award him a loan say at 20%. If he pays without issues, his next loan should be cheaper etc etc until he gets to the best available rate for his circumstances. In Kenya, banks treat everyone the same. Thats why rate cap had to come in and its good.
Salaala, Isn't that contradictory of your long running position. With the rate caps, Banks can only lend such a person at a maximum of 14% or decline altogether. In most cases they are opting on NOT lending to such a person at all! kweli kuelewa kizungu ni ngumu Haven't you been all for the rate caps! Now you are comfy that a random guy be charged 20% interest, but YOU should not pay more than 14%. So this was about YOU all along. Isuni yilu yi maa me muyo - ni Mbisuu
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Rank: Veteran Joined: 10/29/2008 Posts: 1,566
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Kusadikika wrote:Setting interest rates and assessing risk is very hard without data. In the a place like the US there is plenty of data to work with because of the reporting system using the social Security number that tracks everything.
You provide the number every time you rent a house, get utility connection like power and water, buy insurance, buy a car, get a credit card, borrow a loan etc.
There is therefore plenty of information to work with even before you have borrowed any money because if you have failed to pay your electricity or water bill or even rent it shows up.
This system works to provide a lot of information for businesses etc but on the flip side you feel like you are constantly being monitored. Even information like how frequently you use the ATM and what amounts you withdraw is known and probably being used to give a profile of who you are. Of course we are dealing with a bunch of theorists. This is Kenya - for crying out loud. Got to appreciate where we are at present - realism. Isuni yilu yi maa me muyo - ni Mbisuu
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Rank: Veteran Joined: 7/5/2010 Posts: 2,061 Location: Nairobi
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Ngalaka wrote:Kusadikika wrote:Setting interest rates and assessing risk is very hard without data. In the a place like the US there is plenty of data to work with because of the reporting system using the social Security number that tracks everything.
You provide the number every time you rent a house, get utility connection like power and water, buy insurance, buy a car, get a credit card, borrow a loan etc.
There is therefore plenty of information to work with even before you have borrowed any money because if you have failed to pay your electricity or water bill or even rent it shows up.
This system works to provide a lot of information for businesses etc but on the flip side you feel like you are constantly being monitored. Even information like how frequently you use the ATM and what amounts you withdraw is known and probably being used to give a profile of who you are. Of course we are dealing with a bunch of theorists. This is Kenya - for crying out loud. Got to appreciate where we are at present - realism. Once upon a time,..the likes of Barclays and Stanchart required a minimum of 20,000 shillings to keep an account open. This was the late 90's, early 2000s. If you couldn't afford to park an expensive 20k you were not worth their time. Large swathes of Kenya were not worth their time as they started closing branches,..even in big towns like Nyahururu. The bitch slap that came still stings even today... There is an eerily similar parallel here. There is information to work with to assess risk even at present, starting by a bank's own books, its own lending history, its customers' borrowing history. We have a credit reference bureau, don't we? Who is going to be the first bank executive to stop moaning, get off his fat ass and exploit the new opportunities that this rate regime has brought? Who will deliver the bitch slap v2.0? Lets wait and see.
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Rank: Elder Joined: 2/22/2009 Posts: 2,449 Location: Africa
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quicksand wrote:Ngalaka wrote:Kusadikika wrote:Setting interest rates and assessing risk is very hard without data. In the a place like the US there is plenty of data to work with because of the reporting system using the social Security number that tracks everything.
You provide the number every time you rent a house, get utility connection like power and water, buy insurance, buy a car, get a credit card, borrow a loan etc.
There is therefore plenty of information to work with even before you have borrowed any money because if you have failed to pay your electricity or water bill or even rent it shows up.
This system works to provide a lot of information for businesses etc but on the flip side you feel like you are constantly being monitored. Even information like how frequently you use the ATM and what amounts you withdraw is known and probably being used to give a profile of who you are. Of course we are dealing with a bunch of theorists. This is Kenya - for crying out loud. Got to appreciate where we are at present - realism. Once upon a time,..the likes of Barclays and Stanchart required a minimum of 20,000 shillings to keep an account open. This was the late 90's, early 2000s. If you couldn't afford to park an expensive 20k you were not worth their time. Large swathes of Kenya were not worth their time as they started closing branches,..even in big towns like Nyahururu. The bitch slap that came still stings even today... There is an eerily similar parallel here. There is information to work with to assess risk even at present, starting by a bank's own books, its own lending history, its customers' borrowing history. We have a credit reference bureau, don't we? Who is going to be the first bank executive to stop moaning, get off his fat ass and exploit the new opportunities that this rate regime has brought? Who will deliver the bitch slap v2.0? Lets wait and see. 
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Rank: Veteran Joined: 8/28/2015 Posts: 1,247
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Kusadikika wrote:Setting interest rates and assessing risk is very hard without data. In the a place like the US there is plenty of data to work with because of the reporting system using the social Security number that tracks everything.
You provide the number every time you rent a house, get utility connection like power and water, buy insurance, buy a car, get a credit card, borrow a loan etc.
There is therefore plenty of information to work with even before you have borrowed any money because if you have failed to pay your electricity or water bill or even rent it shows up.
This system works to provide a lot of information for businesses etc but on the flip side you feel like you are constantly being monitored. Even information like how frequently you use the ATM and what amounts you withdraw is known and probably being used to give a profile of who you are. With reference to the on going debt restructuring programme for kq, access/ explore ways through which banks have failed in their lending regimes and thus provide a basis to argue in favour of newly implemented capping of interest rates. ,Behold, a sower went forth to sow;....
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Wazua
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Law Capping interest rates
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