Kenyan banks fear collapse over proposed law

Up to 24 banks in Kenya could be forced out of business if plans to raise capital requirements become law, claims the country’s bankers association.

The Business Laws amendment bill would progressively raise core capital requirements for banks to 10 billion Kenyan shillings ($76 million) by 2027 from 1 billion shillings currently.

Officials representing the Kenya Bankers Association advocacy group told a parliamentary committee the move would affect the livelihoods of over 7,000 employees.

The banks likely to be impacted by the law account for 13% of all lending by banks to the private sector, highlighting potential ramifications for small and medium sized businesses, according to the officials.

But banks have been criticized for slowing down lending to the private sector in favor of buying government bonds.

Implementation of the law would likely lead to a wave of consolidation in the sector, with smaller banks forced to sell or merge with larger players.

This story originally appeared on Semafor.