MP: I was offered millions to kill Bill on capping interest rates
The MP whose Bill on capping interest rates has shaken the banking industry has spoken for the first time on how he succeeded where others before him had tried and failed.
Mr Jude Njomo of Kiambu Town, who was out of the country when President Uhuru Kenyatta signed the Bill into law said he resisted a lot of pressure to see it through.
When I met him this week at a restaurant in Nairobi, I could not readily pick him from a handful of patrons. He sat alone at a fairly isolated table fiddling with his phone.
Though we were meeting for the first time, Mr Njomo proffered a gentle firm handshake with eyes that betrayed a self-evasive glint.
It is a rare demeanour for an MP whose recent legislative action could easily have elevated him to celebrity heights.
Shortly into our uneasy banter, Tiaty MP Asman Kamama, strolled in and greeted him enthusiastically, breaking the ice: “Mtu wa interest rates, (the interest rates man), we haven’t heard you dramatising this thing. When are you organising a home coming?”
“No, we are planning a thanksgiving. We want to give thanks for what we managed,” clarified the devout Catholic who had just arrived from a month-long annual global conference of Catholic MPs in Rome.
Soon after MPs passed the Banking (Amendment) Bill 2015 that comes into effect on Wednesday, the MP flew out on what could as well have been a pilgrimage.
While he was away, the President signed the Bill into law and the shock and awe of it reverberated across land and sea to reach him in far-off Europe.
Already, several banks have moved to obey the law that reduced interest charged from between 16 and 25 per cent to 14.5 per cent ahead of Wednesday, its operational date, with some even adjusting rates downwards for existing loans.
The President’s assent three weeks ago hit commercial banks like a thunderclap, shaking their entrenched lending regime and giving Mr Njomo a heroic feat over the battle that has seen giants fall on the side before.
Apparently, the humble electrician from Kiambu had laid the cables correctly in the Bill and done the connections well to eliminate any chance of a short circuit in the process.
The signing came amid intense lobbying and speculation as to what the President would do. Both the Central Bank and the Treasury had advised against it.
Saturday Nation sought out Mr Njomo to know how he managed to outfox the mighty banks.
And the answer had been long in coming given his absence from the country.
“I have just arrived and people are mobbing me all over. Even people I didn’t know are embracing me on the streets. This tells me I was right to have done what I did.”
Granted, and from whichever angle you look at it, Mr Njomo’s battle with banks is epic, one that snugly fits the Goliath vs David duel, only that in this case Goliath didn’t die, but has been immensely tamed.
Mr Njomo’s victory is highlighted by the fact that the past two attempts to reign in sky-high interest rates were a spectacular failure.
An attempt 16 years ago to control interest rates by then Gem MP Joe Donde failed when banks went to court and had it reversed on a technicality even after President Moi assented to the Bill.
Only last year, the Parliamentary Budget and Appropriations Committee overruled an amendment to the Finance Bill 2015 that had been pushed through by Gem MP Jakoyo Midiwo.
The irony was that Mr Njomo, an alumnus of Kenya Polytechnic, now Technical University of Kenya, was succeeding where Mr Donde, a UK-educated economist and Mr Midiwo, an eloquent and veteran debater had failed.
So what was Mr Njomo’s secret? “I didn’t make noise about it. I knew if I did they would find ways to fight me. I involved the banks at the right stage. After Second Reading, I asked the Speaker to invite them to bring in their arguments,” the former Kenya Power and Lighting Company engineer says.
He adds his other strategy was to avoid overtures to meet bank chiefs in private.
“People who said they represented banks came to me trying to talk me out of the matter. I wouldn’t name a figure, but it was obviously a lot of money. I rejected it.”
He says he was fully alive to the pitfalls that had sunk the previous attempts, and thus trod carefully lest he stepped on commercial live wires and explosive legal mines.
“I had consulted widely. Remember the Donde Bill failed because of legal loopholes,” says the MP who runs the Thika-based Munyu Institute of Technology (MIT) and a children’s home in Ruiru.
He says the time to lift the long-standing load off Kenyans’ backs was ripe and he didn’t want to short circuit the process with a loud, boisterous campaign.
But even as he plotted his assault with the stealth of a leopard, banks came out with guns blazing once the MPs passed the Bill.
They lobbied everyone who lent them an ear and lobbed “fear gas” canisters at the jubilant supporters of the Bill.
They proclaimed doom saying that the law would hurt rather than help borrowers, especially small ones.
Critics charged that with the capping of interest rates at four per cent above the Central Bank Rate (10.5 per cent), there won’t be enough cash to go around, and that the biggest losers would be the small businesses which banks consider risky borrowers.
Mr Njomo agrees, but quickly adds that the country had to choose between two evils.
“The challenges we might get are not as insurmountable as the ones we already bear with higher rates. More money will be made through the bigger profit margins. If you were paying 20 and now you are paying 14 per cent it is a huge relief.”
Asked if the new law could fail to bring the anticipated rewards as has happened in a number of countries, he says:
“Such concerns are misplaced. Why look only at the countries that have failed? There have to be other reasons why those countries failed. Look at Canada and the US. They cap their interest and they are doing well.”
With elections around the corner, some say President Kenyatta signed the Bill with his eyes fixed on clinching a second term. Did Njomo trap the son of Jomo?
“No, no. When I tabled the Banking (Amendment) Bill 2015, I didn’t even know it would take this long. The President listened to the cries. You the media also helped a lot by highlighting the suffering of the people weighed down by loans.”
Despite the victory, Mr Njomo isn’t sitting on his laurels and savouring the fame. He is already onto other areas that some think are crying out for similar interventions.
He is now working on the National Industrial Training (Amendment) Bill, which he is convinced will benefit small businesses.
“It is now awaiting the first reading. It will provide a better enabling environment for our SMEs.”
The father of four says the motivation for this new Bill arose from an accident at a site where he was a contractor.
He says the damage was extensive because of the ill-trained workers.
Away from legislation, the MP is also working on charity initiatives. One of these is a plan to climb Mount Kenya for an education fund for needy children.
The 52-year-old first-time MP says he aspires to build model primary schools and talent academies with the fund. He also plans to enhance Kiambu Institute of Technology to become an incubator of business models.