Treasury reassures central bank on new regulator

Kenya’s proposed financial-markets authority will not infringe on the mandate of the country’s central bank, which has complained the new agency would leave it “emasculated”, the Treasury cabinet secretary said on Thursday.

Patrick Njoroge, the central bank governor, said last month the draft law that proposes the creation of the new agency would emasculate the central bank and leave consumers at the mercy of lenders.

The bill aims to protect consumers from “predatory” non-bank lenders, Finance Minister Henry Rotich said, adding the Treasury will take into account the views of the central bank before the draft law is presented to parliament.

“It is not going to create any conflict with the prudential regulations by any regulator,” he told a news conference at the Treasury. “There is no overlap, duplication or contradiction whatsoever.”

Critics say a proliferation of lenders using mobile phone financial technology to extend credit to people even if they do not have bank accounts is saddling borrowers with high interest rates and leaving regulators scrambling to keep up.

The East African nation has seen a surge of non-bank lenders in recent years, ranging from mobile phone platforms to traditional moneylenders who operate in small offices without any license, who charge interest rates of 20 percent per month for small loans.

Njoroge had said the bill would take away the central bank’s ability to deal with “reckless lending”, limits its power to issue prudential guidelines and place banks under receivership.