MP Explains Why Kenyans Might Get Fewer Loans From Banks

Suba South Member of Parliament Caroli Omondi has cautioned that the government’s aggressive borrowing from the local market could limit access to credit for ordinary Kenyans.
Speaking during a morning show onCitizen TVon Monday, August 18, Omondi claimed that the government intends to raise Ksh480 billion locally this year, a move he warned could crowd out commercial banks from extending loans to individuals and businesses.
The MP noted that there is an urgent need for the government to devise new, sustainable strategies that will enable Kenyans toaccess affordable credit from financial institutionsto prevent citizens from sinking into poverty.
The MP, who was responding to President William Ruto’s move to push for empowerment programmes, further said that such programmes should be accompanied by educational programmes that will enable Kenyans to use the funds wisely.
“The empowerment programmes are not sustainable because if you want to help people get out of poverty, you must give them affordable credit, and that affordable credit must be something that goes in a cycle, if they borrow, they use, and repay back,” the MP stated.
“The government is borrowing too much from the market. This year alone, it plans to borrow Ksh480 billion, which will mean that banks will not have the incentive to lend to the small people anymore,” he added.
The statement by the MP comes a week after President Ruto announced plans toestablish a  Youth Enterprise Investment Bank, which will provide affordable financing, credit guarantees,and capacity-building programmes for young entrepreneurs.
Speaking in Kakamega on Tuesday, August 9, President William Ruto announced plans to establish a Youth Enterprise Investment Bank, a move he said would be key in promoting financial inclusion among the youth and creating sustainable economic opportunities.
Ruto explained that the bank is expected to address common financial hurdles faced by young entrepreneurs, including lack of collateral, high interest rates, and limited access to business development training.
According to the Head of State, the project will be rolled out before the end of the year with a capital base of Ksh9.75 billion.
“To further support youth-led enterprises, we shall, before the end of this year, launch the Youth Enterprise Investment Bank. The bank will be capitalised at Ksh9.75 billion to provide financing, credit guarantees, and capacity building for young people,” Ruto said.