Experts rapping on regulation, say the trend scares investors

This is a day when the banking industry never wanted to come. But on August 24, 2016, President Uhuru Kenyatta gave them his freedom in pricing.

Once the law capped interest rates, layoffs, fees and additional commissions and roll-out of new products as banks sought to protect their margins, according to the Central Bank of Kenya (CBK).

"While the banks' income structure has begun to move away from interest income, some banks have exploited the existing limits of approval to increase fees on loans in one" CBK said in a study on the cap-on-rate regime released in March.

But before the industry settles into this new controlled cost of credit standard, the National Treasury is preparing the removal of this The bill seeks to create four new entities to regulate access to credit: Autorité des marchés financiers, Financial Sector Ombudsman, Com-
Apparently, such an unstable environment in which regulation still seems to change In a number of sectors, the government is introducing additional regulations or reforming existing ones. Kenya Bankers Association (KBA), Habil Olaka, told Sunday Nation in a phone interview that such an environment of perpetual changes in regulation frightens investors. "

" An investor wants stability and the ability to plan in order to make better decisions based on the information that he has synthesized. If there are too many uncertainties in the regulations, then it delays the decision-making or it can lead investors to make negative decisions, "he added.

He adds that in When investors compare different tax regimes, they can easily for a high and stable tax policy market and other regulations as opposed to that with low taxes but rapidly changing regulations.

According to the head of Barclays Bank of Kenya (BBK) strategy Moses Muthui, formerly a Wall Street investment banker, slipping regulation in the financial sector can encourage businesses to take advantage of any available loopholes in order to avoid what They perceive it as an unfavorable set of rules

"As the industry expands, we will likely see a cycle of over-regulation. lead to regulatory arbitrage as we saw in Europe leading to the financial crisis, "he warned.

When it is pbaded, the 2018 Financial Markets Bill will be a new space for financial sector players. . This is happening in a sector that has recently adopted new information on nonperforming loans, in accordance with the International Financial Reporting Standard (IFRS) 9. In addition, the 2018/2019 budget provides for another regulation in this respect; The CS Treasure Henry Rotich has announced a 0.05% tax on cash transfers of 500,000 shillings and more.

According to Barack Obatsa, the chief investment officer at ICEA Lion Asset Management, the fees will bring uncertainty in the investment market, reduce investors "returns at least three percent and depresses the work of fund managers . "

"It is likely that investors will limit their transactions to minimize the costs they will incur," he said.

million. Obatsa said that one of them would probably be taxed four to six times in a single investment cycle.

Barclays Kenya's chief executive, Jeremy Awori, warns that regulators must be careful not to solve a problem using a given regulation. by creating several others by the same regulation.

"What we need to do is make the process as simple as possible for banks and as affordable as possible to allow all businesses to focus on growth and growth." Olaka thinks that The introduction of numerous settlements in a short time makes it difficult for investors to know where to invest their money. "Quoting the" Robin Hood "tax, Olaka said it would change the kind of yield to which expected those who had invested before its establishment.

"This uncertainty is what sometimes leads to a wait-and-see attitude or a bad decision. "The apathy of investors sometimes leads to slower growth," Olaka said during a telephone interview

. Data from Kenya's National Bureau of Statistics shows that the financial and insurance sector grew 2.6% in the first quarter. compared to 5.3% in the first quarter of 2017.
The sector posted slower growth from 6.7% in 2016 to 3.1% in 2017, the slowest growth in a decade.

The National Treasury is committed to removing the interest rate cap to encourage banks to reopen credit checks. While this is good for banks, this presents another uncertainty for investors who might want to finance their projects on credit. The repeal of the interest rate cap may result in a rise in the cost of credit, which puts pressure on repayment.

Other sectors that have undergone changes or imminent regulatory changes include mining, the retail market, and education. For example, investors in school uniforms may face a disruption if the proposal to have all schools wear the same color as uniforms.