Industry stance on interest capping irks consumers

Consumers Association of Malawi (Cama) has expressed dissatisfaction with the business community for taking a stance against the capping of interest rates on loans from lending institutions.

Cama executive director John Kapito said on Friday beneficiaries of the proposed law  will be members of the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) who attribute the slow growth of their businesses to high interest rates.

“While it is appreciated that the capping of interest rates has put MCCCI in a hard place because most of the financial institutions  like the banks are their members, it is important to understand that their membership is also drawn from the non-banking sectors, some of whom have seen the collapse of their industries as a result of high uncapped interest rates.

“This is the time we expected MCCI to support facts and common sense in supporting this Bill,” he said.

Dowa West member of Parliament Alexander Kusamba Dzonzi (Malawi Congress Party) tabled the Private Member’s Bill in Parliament in December.

But MCCCI chief executive officer Chancellor Kaferapanjira said he is not for the law.

He said he is not arguing against the fact that the cost of finance is a constraint, but he is against buying the  mechanism followed to address the challenge.

“We think that interest rates should indeed go down, but putting it in a law means that we are putting up a permanent structure and the law will be very difficult to change,” said Kaferapanjira.

Interest rate capping is a regulatory measure that prevents banks or other financial institutions from charging more than a certain thresshold of interest. n