In Summary
  • Cofek says banks' liquidity ratios are far from showing any danger signs.
  • The lobby also accuses CBK of failing to stem huge government appetite for domestic borrowing.
  • The law capping interest rate was assented to by President Uhuru Kenyatta on August 24, 2016.

The Consumer Federation of Kenya (Cofek) has accused the Central Bank of Kenya (CBK) of falling into the International Monetary Fund (IMF) policy capture and doing too little to instil discipline in the financial services sector.

Cofek, while welcoming a decision by the Finance Committee of the National Assembly to reject CBK’s proposal to scrap the law capping interest rates, also accused the regulator of failing to stem huge government appetite for domestic borrowing.

“Instead of CBK offering factual insights and demonstrating the purported failure of the law, the CBK governor Dr Patrick Njoroge has taken to a non-persuasive blanket condemnation of the law before and after assent.”

“He has declined requests to meet with consumer representatives while he regularly consults the bankers lobby. That he is an embodiment of skewed regulatory failure is a matter within the public domain,” Cofek secretary-general Stephen Mutoro said in a statement Friday.

Mr Mutoro said the House committee’s position vindicated their view and that of the Institute of Certified Public Accountants of Kenya (ICPAK).

Long-term controls

He said as a consumer representative body, they do not support long-term price controls, but where governance and regulatory discipline has dipped, such as the case with Kenya’s banking and financial services sector, price controls are inevitable.

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