Ruto termed the issue as a puzzle that needs to be dealt with, adding that he cannot understand why lending rates remain high in Kenya, while very low in countries with similar economies to Kenya.
He observed that banks remain the highest beneficiaries in the financial sector, at the expense of borrowers and depositors.
“I am yet to get an answer that is simple enough for me to understand. The spread… that is, the difference between the rate paid to depositors and the rate paid by borrowers, is too high. In some countries its 2 percent, in other countries it is three, but in Kenya it’s over 10. Honestly, Central Bank must help us,” Ruto said.
Despite the continued signal sent by the CBK to commercial banks to lower their lending rates, borrowers are still paying high interest rates for their loans of up to 17percent.
The banks have defended themselves saying the drop may not be determined by the CBK rate due to what they term as high cost of funding.
Last month CBK retained its lending rate at 8.5 percent following lack of inflationary pressures despite introduction of the Value Added Tax (VAT) law is September this year.
Riding on the stable CBR rate, Ruto said the government was looking forward to having the interest rate spread drop to a single digit next year.
“I had a discussion with the (CBK) Governor Professor (Njuguna) Ndung’u, Iike a month ago, on how we can make credit affordable and I believe the issue of interest rates can be settled,” the DP said.
Ruto also challenged the CBK to work closely with the banks and come up with a plan that will increase mortgage uptake in the country which currently stands at 20,000.
“Forgive me if I am too basic on this issues but that is the general understanding out there. For the size of the economy that we have, and the kind of success we have built, we should be having a million mortgages. I am reliably told that we have only 20,000,” he regretted. “That tells you a very big story and I approximate that Central bank can do something about it.”
He was speaking during the launch of the gold coin by CBK to commemorate 50 years of independence on Monday.