Govt to Cushion Loan Defaulters Over Crisis?

  • President Uhuru Kenyatta signs into law the Movable Property Security Rights Bill 2017, on May 10, 2017.
    President Uhuru Kenyatta signs into law the Movable Property Security Rights Bill 2017, on May 10, 2017.
    PSCU
  • The government on Tuesday, March 17, announced that it was looking to set up a fund to act as a buffer, as the Covid-19 pandemic is set to have adverse effects on the economy.

    Members of the National Assembly urged the state to craft a stimulus package to cushion the economy, following the closure of several businesses due to the coronavirus outbreak.

    "The first thing that the government needs to do is to protect financial institutions, which are more vulnerable to economic shocks. These institutions support the economy. They need to be protected because many people may not be able to pay their loans," Suba South MP John Mbadi stated.

    A medical practitioner dressed in protective gear at Coronavirus isolation and treatment facility in Mbagathi District Hospital on Friday, March 6, 2020
    A medical practitioner dressed in protective gear at a Coronavirus isolation and treatment facility in Mbagathi District Hospital on Friday, March 6, 2020
    Simon Kiragu
    Kenyans.co.ke

    Some of the proposals put forward to the government include the creation of a special fund to cushion traders and ordinary Kenyans unable to meet their financial obligations like repaying loans, a call for the reduction of taxes, expediting the process of refunding value added tax, and a reduction of lending rates.

    In his response, Treasury Cabinet Secretary (CS) disclosed that a plan was in being formulated, "We shall have a comprehensive view and proposal by Thursday, March 19," he announced.

    The lawmakers argued that a economic effects were inevitable due to the numerous business closures, urging the government to take a proactive approach to counter the expected negative effects.

    "A lot of businesses will be affected. As Parliament, we must sit down with the National Treasury and create a fund to cushion businesses. The German government has given €300 billion to make sure that no business is shut. In the interim, many people may not be able to pay their loans," National Assembly Majority Leader, Aden Duale stated.

    He went on to argue that following the directives issued by President Uhuru Kenyatta to combat the spread of Covid-19, people would to a large extent operate from home while a huge percentage of the population would be practically unproductive.

    Vocal lawyer Donald Kipkorir opined that President Uhuru had the power to offer Kenyans economic reprieve during this challenging period.

    "If President Uhuru Kenyatta declares a State of Emergency under Articles 58 & 132 of the Constitution to combat Covid-19, the law will allow him: Suspend payment of Taxes, Rent, Loan Interest, Water & Power Bills," Kipkorir's statement reads in part.

    On his part, Narok Senator Ledama ole Kina, called for a radical move to cushion Kenyans.

    "To cushion Kenyan citizens who are taking a hit economically please request financial institutions to consider suspending Mortgage and Chattels (car loans) repayment for 3 months,

    "By extension request landlords to suspend rent payments for 3 months! This will help Kenyans stay at home and allow the world to fight the virus without worrying about a roof over their head," the Senator pleaded.

    Some countries hit by the deadly virus across the world have already set up funds and passed policies to aid the ailing economy while providing reprieve to its citizens.

    In Europe for instance, the Deputy Economy Minister Laura Castelli on March 10, announced that mortgage payments and household bills were suspended until further notice.

    The government has so far confirmed four cases of Coronavirus patients currently receiving treatment while under quarantine.

    Health CS Mutahi Kagwe announced on March 17, that the latest victim had travelled back into the country from London on March 9.

    Ministry of Health Cabinet Secretary Mutahi Kagwe addresses the media
    Ministry of Health Cabinet Secretary Mutahi Kagwe addresses the media from the Mbagathi District Hospital on Friday, March 6, 2020
    Simon Kiragu
    dead fight