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Mystery over rate capping

Parliament accused of hijacking bill

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FEARS FOR ECONOMY— Nkungula

Mangochi South West lawmaker Shadric Namalomba has accused the Parliament Secretariat of wasting his time and money drafting the Interest Capping Bill when they were fully aware that another Member of Parliament (MP) was working on a similar document.

Namalomba told The Daily Times that he smells something fishy in the way the whole issue was handled by Parliament’s secretariat.

According to Namalomba, he first brought a motion to Parliament on March 25 this year but was sent back on the basis that he did not follow the right procedure of bringing a motion to the floor.

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As a result, Namalomba came up with a motion.

“That having observed that exorbitant interest rates on loans obtained from banks and other lending institutions have failed most citizens of the Republic of Malawi to service the loans and in some cases [they have led to] forfeiture of property, this House resolves that a Private Member’s Bill that prohibits all commercial banks and all finance lending institutions from recovering more than 100 percent of the principal loaned amount be drafted and introduced in the House for consideration,” the motion reads.

He claims that, when he submitted the motion again during the June meeting of Parliament, he was advised to proceed and come up with a draft bill on the same.

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Namalomba added that he has been waiting for the matter to appear on the Order Paper— the official business document of Parliament— to no avail.

According to Namalomba, when he took leave to travel to the United States early this month, Parliament communicated to him on a weekend, asking him to go and sign for the bill.

He said he was shocked to see his motion and bill appearing on the Order Paper with the name of Dowa West MP, Abel Kayembe.

“It is ironical that Parliament facilitates this unprocedural way of getting another member to present a bill of another member. Again, it is politics. Here is a member of the Tonse government presenting this bill, yet the government has all the resources at its disposal to bring the same bill as a government bill.

“Why is the government pushing their member to bring this bill as a Private Member’s Bill? I should warn Malawians that this bill will not see light at the end of the tunnel. The process will be dragged, controlled by the government and sadly never will it become a law,” Namalomba said.

When contacted Parliament spokesperson Ian Mwenye asked for more time to consult on the matter.

But Kayembe yesterday denied hijacking the bill, saying the piece of legislation was from Dowa West and was initiated by his predecessor Alexander Kusamba Dzonzi in the previous term.

Kayembe said the task was handed over to him to complete in Parliament.

“I am not aware that Honourable Namalomba drafted a bill on this; if he did, then Parliament can explain better on this.

“I am pursuing the task that Honourable Kusamba Dzonzi left and, having been requested by our people to reintroduce the Interest Capping Bill, I moved a motion in Parliament to that effect,” Kayembe said.

According to Kayembe, he remembers that when Namalomba raised the issue in Parliament, the Speaker of Parliament challenged him that he failed to submit a bill to Parliament for processing and that he was even asked to give evidence if he did, but he just remained silent.

“You may cross-check this information with his parliamentary leadership in Business Committee which endorsed my proposed motion to reintroduce the bill,” Kayembe said.

The bill, which was introduced in Parliament on Thursday, is designed to iron out challenges being faced by Malawians as they are required to pay exorbitant interest rates whenever they access a loan from banks and other financial institutions.

It cites exorbitant interest rates on loans obtained from banks and other lending institutions as the motivating factor for coming up with the draft piece of legislation, indicating that some Malawians have lost property worth millions of Kwacha over failure to pay back loans.

Among other things, the bill seeks to amend the Financial Services Act, Cap 44:05 of the Laws of Malawi, to regulate interest rates on loans obtained by banks and other financial lending institutions after it was observed that some borrowers had lost property after failing to honour loans.

The bill proposes a fine of K500 million to banks that recover interest of more than the principal from borrowers.

However, the Bankers Association of Malawi (Bam) warned on Thursday last week that, by reducing the lending rate to levels below adequate risk pricing, banks would stop lending to individuals and small and medium-scale enterprises.

Bam Chief Executive Officer Lyness Nkungula warned that, given the short-term nature of lending books in Malawi, with high reliance on overdrafts, the decision by banks to limit their lending appetite would have an almost immediate impact on the economy.

“The private sector would stop having access to credit and excessive funds would be allocated to government-driven projects, leading to higher losses in parastatal entities and [to those that] pursue non-viable activities,” Nkungula said.

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