Central Bank Rate(CBR) jerked from 5.8 in 2010 to 20 per cent in 2012. This was during the bloated coalition Government of the late Mwai Kibaki and Raila Odinga.
The Uhuruto Government stabilized it at between 8 and 9 per cent between 2014 and 2016.
Between 2016 and 2022, then Central Bank Governor Patrick Njoroge pushed it down to 7 per cent.
After the August 2022 elections, the CBR rate started climbing steadily to double-digit figures of 10.5 per cent
This means that during the Mwai Kibaki Presidency, the cost of borrowing was below 8 per cent.
The entry of the bloated Coalition Government pushed the cost of borrowing to more than 25 per cent, starving the economy of credit.
The June 26th CBR rate of 10 per cent effectively raises the cost of credit to 14 per cent.
This is at a time when Kenya is reeling from enhanced tax burdens and the rising cost of living among others.
Governor Kamau Thugge has taken over at CBK during very hard times. Unless he delivers a Thugge impact, the noise will soon emerge from Central Bank.
The Government’s appetite for domestic borrowing has lately risen, with consequences to individual borrowers among others.
This competition for cash between Government and citizens was rampant during the President Moi era—specifically in 1997 and 2002.
Then, it was impossible to service loans, leading to default rates of more than 70 per cent
This triggered the formulation of the Donde Bill by MPS to cushion borrowers from impossible interest rates.
Between 2003 and 2005, Kibaki ordered then CBK Governor Dr Andrew Mullei to institute Public sensitization on commercial banks charging the highest interest and fees.
CBK and the local newspapers published paid advertisements to name and shame the most expensive banks every Tuesday.
The drive was interrupted by the 2005 referendum that reverted Kibaki back to factory settings. After he lost to Raila, Uhuru, Ruto and Kalonzo.
With political heat boiling, the CBR rate could Head northwards to the 20 percentile point.
This will ultimately expose the economy to tremors and occasion foreclosures in the mortgage, retrenchment, and other social ills.
