The "rejuvenation" is needed across the entire spectrum of Government first.

Slow resolution of cases at the courts which delay justice. And defaulters can get away for years without paying off their debts! Then we have fake title deeds which hamstring genuine borrowers.

GoK borrowed at 15% and wants banks to lend at 14.50%? How now? Sensible banks will put more money in [risk-free] T-Bonds and T-Bills rather than lend to [risky] customers.

(Short-term) T-Bonds and T-Bills do not (negatively) affect the Capital Ratio Requirements. Plus GoK/CBK pays interest every 6 months. And these securities are easy to REPO with CBK if banks need cash.

As long as GoK is in the business of Business... Look at KQ, Mumias, NBK, etc which have been sucking in cash raised via T-Bills/Bonds competing against (genuine) Taxpayers.

The solution(s) is for GoK to:

1) Stop borrowing at high rates for projects. Rationalize the projects being funded using taxpayer funds eg NYS.
2) Stop borrowing to fund the recurrent expenditure eg commissions, cars, etc.
3) Rationalize the court system to defaulters are brought to book sooner.
4) Improve the collateralization system e.g. fake/duplicate Title Deeds, etc which makes it harder for GENUINE borrowers.
5) GoK should get out of the business of Business eg KQ, Uchumi, etc.

All the other stuff is irrelevant as long as GoK spends money like it can be printed. Which it can. With inflationary results.

Let the President start monitoring. He said they will be monitoring, didn't he?

The CS and Central Bank Governor must be having a terrible job at the moment. They advised the president not to sign and gave him reasons and he signed anyway. Now he will expect them to deal with the aftermath!!! Ever woke up and didn't feel like going to work? That is those guys today? And tomorrow... And for a while...

And you imagine the President will be in a brainstorming group trying to figure out how to deal with the aftermath??? Your guess is as good as mine!!

Until Q1 2017

Easier said than done..this is Kenya we love shortcuts for everything.

In my opinion, this law will force banks to work for their money. They will have to lend prudently by examining how the funds will be used in certain projects. This is a good thing for Wanjiku because they will be getting free financial advise in the process...basically, if the banker refuses to give you a loan, your idea probably sucks. Previously, they could afford to finance two bad projects for every five because the spreads were large enough.

Creativity starts now. Credit cards will now be one of the holy grails for the banks. Expect a call on soon from your 'friendly bank'.

Obscene..that is one of those myths.. as a percentage of their total assets the banks are making less than 5% in profit.Compare that to the return in other investments ie real estate,wholesale and retail etc you will find that the banks are not really doing that well. Don't be wowed by the absolute figure.

The problem is not the return that Banks make, but how they do it. In fact I would not mind if they made 10-20% - but they have become the worst brokers you can think of. They take Wanjiku's money, pay her a pittance and then sell it back to her at an exorbitant cost.

In more developed economies Banks make most of their money from investment financing, IPO, M&A, risk mitigation, conveyancing services etc. In Kenya they have become lazy and rely on interest charges and government paper. This has to stop.