Monday, March 21, 2005

Banking & Health Care: Parliament vs. President

During his December 2004 Christmas holiday, President Kibaki gave his assent to the few Bills that Parliament had passed during the year, with two notable exemptions – the Banking Bill and the Health Insurance Bill.

Now populist MP’s eager to show that they represent poor Kenyans are clamoring for a fight to see that these two bills are passed.

The president objected to the National Social Health Insurance Bill 2004, because of the monstrous cost of the plan. He indicated that it should be implemented in financially feasible phases. MP's are arguing that the rich (excluding themselves) should pay for the health care of the poor through taxes under the new scheme.

And his objection to the Banking (Amendment) Bill 2004, is because it contains a controversial clause known as the “in duplum rule” – which basically caps the amount that someone has to repay on a loan they default. I.e. if you take a loan of 1 million shillings and default on it, a Bank can only charge interest and penalties up to 1 million shillings – capping the amount you may be asked to repay at 2 million shillings. MP's insist that the clause will stop poor Kenyans from being ripped off by foreign Banks.

Under the current law, there are people who defaulted on 1 million shilling loans, and have paid several million in penalties, and still owe more million in penalties to the Bank. Donors and the major Banks and donor organizations have objected to the clause, insisting that a free market can set its own rates.


Afromusing said...

Perceptive, thanks Bankelele. Universal healthcare is something that Americans supposedly want but cant get around to supporting it through the people they elect. It is a great idea, if Kenya can figure out how to cost-share, that would be beneficial in ensuring a great future. One more thing, i just hope Kenya never lets pharmaceutical companies advertise. The bank rule is crazy! No wonder small businesses in the 90's were suffering under this burden.What to do... what to do?

bankelele said...

working kenyans are already over-taxed, especially salaried ones. The new health scheme will tax both employer and employee even more.

Also, for the few who have employer-sponsored health schemes, those will probably end, as very few companies will be able to afford to run two health packages at the same time i.e. the NSHIS scheme and a separate healthcare plan

Afromusing said...

Thanks for elucidating, I didnt know that the $ for the health plan was to come from taxes (oops). The thing is with these 'Universal type' initiatives, the problem is typically where does the money come from. The Nyayo years remind us of good ideas (kenya Bus, University 'boom' or stipend and other 'social' programs) that were popular and albeit beneficial but were NOT SUSTAINABLE, because of many factors, one being dependance of budgetary support on aid, corruption etc. There's got to be a 'market' component for these ideas to work and be sustainable.


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