In his State of the Nation speech, President William Ruto claimed that interest rates have trended downwards, adding that this decrease has freed up money for businesses to grow.
“Ladies and gentlemen, interest rates are also trending downwards, reducing borrowing costs and freeing up fiscal space for growth-enhancing initiatives by businesses,” Ruto said in his speech.
Background
President William Ruto’s speech in parliament comes months after deadly protests in Kenya against poor governance, corruption, and punitive taxation policies. Over 60 Kenyans were reportedly killed in the protests between June and August 2024 which rights groups blame on police brutality. These were the second wave of demonstrations after mass protests in 2023 against the high cost of living. Since then, inflation rates have reduced steadily but scepticism remains about the policies of the Ruto administration.
Verification
Interest rates are the costs incurred when borrowing money from a lender. In the national context, it refers to the percentage of interest the government is offering treasury bills and bonds and how much banks offer for savings and loans. When interest rates are low, spending on consumption by households and businesses increases and vice versa.
According to Central Bank of Kenya (CBK) data between September 2022 and September 2024, the average interest rates of commercial banks have been increasing, and are clearly not on a downward trend as claimed by Ruto.
Average lending rates in commercial banks have been increasing since 2020 as seen in data from the Central Bank of Kenya.
Lending rates stood at 12.41% in September 2022 compared to 16.91% in September 2024. Interest rates on savings were at 3.44% in September 2022 compared to 3.57% in September 2024. Interest rates on overdrafts were 11.99% in September 2022 but had risen to 16.83% by September 2024.
The data clearly show that lending rates have been on an upward trend since 2022, meaning access to financing has become more expensive, contrary to President Ruto’s claim in his state of the nation address.
Verdict
Ruto’s claim that interest rates are trending downward is FALSE.
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