Hansard Highlights week 6th February 2011

I.  The Minister of State for Special Programmes Esther Murugi responds to allegations that she claimed people living with HIV should be incarcerated.

GOVERNMENT POLICY ON HIV/AIDS VICTIMS

Hon. Members will recall that HIV/AIDS was declared a national disaster in November 1989 by the former President of Kenya. The Government policy on HIV/AIDS is clear and it is governed by two key policy documents; that is, the Sessional Paper No.4 of 1997 on AIDS in Kenya; and HIV/AIDS Prevention and Control Act, 2006. Chapter 2, Section

2(7) of the Sessional Paper states:

“With respect to human rights, all forms of discrimination against people with HIV/AIDS is outlawed as enshrined in the Constitution.”

Similarly, Section 30(3) of the HIV/AIDS Prevention and Control Act states that

“No person shall be quarantined, placed in isolation, refused lawful entry, or deported from Kenya on the grounds of the person’s actual, perceived or suspected HIV status.”

Mr. Deputy Speaker, Sir, the workshop organized for hon. Members on 28^th January 2011, was called to update hon. Members on the progress made and challenges in the national response to HIV/AIDS, including the third Kenya National AIDS Strategic Plan amongst other objectives. It was during the participatory discussions and contributions on how to overcome the challenges that I sought to provide examples of other countries that have tried to control the epidemic.  I gave the infamous example of how Cuba, in 1988, after a massive testing campaign, incarcerated people living with HIV. Cuba has always had a very low prevalence and very low new infections and, in that way, it is very different from Kenya. They withdrew the policy of incarceration in 1993.

Other countries that have recorded tremendous success include Rwanda, whose prevalence rates have reduced from a peak of 11per cent in 1990 to 2.8 percent in the recent times. In those countries, universal access and country ownership drive the HIV response, thus the low HIV incidences and low AIDS related deaths.  I raised the issue of Cuba in order to foster discussion and debate and never intended to imply that Kenya should start a strategy of incarceration. That would be contrary to many human rights conventions that Kenya has signed and, ultimately, such an approach will not be successful in controlling the epidemic.

Controlling an epidemic of that magnitude, where 1.5 million people are living with HIV, requires a massive scale up of people accessing testing, counseling, disclosing to their sexual partners and accessing a range of prevention services. Currently, only 57 per cent of adults have been tested and that is a cause for concern. While I continue to support the view that we look at other countries’ approaches and learn from them in order to rid Kenya of HIV, protecting and promoting human rights will encourage people to come forward and access services and reduce the stigma that is associated with the epidemic.  In conclusion, I will urge all Kenyans who are sexually active to be tested for HIV/AIDS in order to plan their lives, learn the dos and don’ts and what to do whether they are negative or positive.

II. Most of us are going to need some sort of asset finance if we intend to own a home, however the double digit bank lending rates are turning some us into renters for life, so its nice to know that the government is discussing some sort of caps on interest rates on loans.

MEASURES TO RECTIFY SKEWED LENDING RATES BY BANKS

Mr. Kombo asked the Deputy Prime Minister and Minister for Finance: -

(a)   If he is aware that commercial banks are taking deposits at less than 2 percent and lending at over 12 per cent,

(b)  If he is also aware that the practice is discouraging both depositors and borrowers and hence hampering economic development and, if so, what measures the Government will take to ensure that the above situation is rectified; and

(c)   If the Minister could also explain why efforts by Central Bank of Kenya (CBK) to persuade commercial banks to reduce their lending rates has not been successful

The Assistant Minister, Office of the Deputy Prime Minister and Ministry of

Local Government (Mr. Nguyai): Mr. Speaker, Sir, on behalf of the Deputy Prime Minister and Minister for Finance, I beg to reply.

(a) I am aware that as at October 2010, commercial banks were lending an average weighted rate of interest of 13.85 which is over 12 per cent. The average weighted rate of interest for all saving products over the same period was 3.58 per cent and 1.58 per cent higher than the 2 per cent. I am aware that the lower interest rates on savings and the higher interest rates on lending are likely to discourage savings and borrowings respectively. However, I wish to point out that the country has realized tremendous growth. Deposits in the past two years and this growth have contributed to the putting down of pressure on deposit rates, particularly as the demand for loans were low due to the sluggish growth of the economy.  With the economic recovery expected this year and in the mid-term, we anticipate that deposit rates will begin to rise as banks compete for resources to lend. Indeed, this development should reduce the spread between the lending and deposit rates.

(b) Regarding the lending rates, as our fiscal consolidation continues to gather pace, we anticipate that the interest on the Treasury Bills will remain subdued. This will encourage banks to compete more vigorously with each other for lending to the increasingly vibrant private sector. The increased competition should lead to lower lending rates, which combined with the envisaged higher deposit rates should further narrow the interest rate spread.

(c) Indeed, some banks lowered the rates in response to easing the monetary policy of the CBK although we would have preferred to see sharper reductions. However, it is important to emphasize that there are structural impediments that prevent banks from reducing rates significantly including, for example, the long time it takes for banks to realize collateral. We are taking steps to address the impediment and we believe this will result in lowering the banks’ operating costs and facilitate an extension to the savings to the consumers in the form of lower lending rates.

Mr. Kombo: wanted to find out from the Assistant Minister what he means when he says that persuasion by the CBK has yielded some results though not satisfactory. There was a time when CBK had set ceilings for the commercial banks to lend. Now, if they are not being persuaded, can the CBK or the Government consider re-introducing the ceilings above which the commercial banks cannot impose interest rates on borrowers? If they do not obey, there must be stiff penalties attached to that.

Posted by Mzalendo Editor on April 10, 2011

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