- Bill to be introduced in Parliament once public participation ends.
- Merger to occasion disruption of normalcy at the targeted entities.
The National Treasury is seeking public views on the proposed merger of three state corporations to form the Kenya Development Bank.
Cabinet Secretary Ukur Yatani has asked wananchi to give their input on the plan to collapse the Tourism Finance Corporation, Industrial and Commercial Development Corporation and IDB Capital Limited.
Kenyans have until June 19 to give their views on the draft Kenya Development Bank Bill, 2020, which states that the bank shall be the successor to the three corporations.
The three state agencies are mandated with steering development and tourism in the country and have individual staff structures which are set to be disturbed by the merger.
The Treasury, the ministries of Tourism and Wildlife as well as Industry, Trade and Enterprise Development, the Attorney General and the three institutions developed the Bill.
President Uhuru Kenyatta’s administration intends to use the bank as a means to drive development especially in the manufacturing sector.
The National Treasury has proposed Sh100 billion capital for the bank to be divided into 20 billion shares of Sh5 each.
It is expected to lend support to medium and large-scale industries, infrastructure projects and commercial undertakings in various sectors.
The bank, the Bill states, will also provide venture capital, seed capital and risk capital for industries.
Companies will be backed to execute their undertakings, works, projects or enterprises whether public or private.
Kenya Development Bank will, however, not be the sole source of finance in respect of any undertaking or enterprise.
Assistance to industries will be by way of guarantees, loans or investment and not by way of grant or subsidy.
The bank, according to Yatani’s proposal, may also require early repayment of its loans, guarantees or investments to ensure it remains liquid.
The bank is envisioned to breathe life into the falling manufacturing pillar of the President’s development legacy plan.
At least Sh18.2 billion has been set aside in the financial year 2020-21 budget to bolster the manufacturing agenda.
CS Yatani said the bank would finance development projects to catalyse achievement of the Big Four by aiding the expansion of industrial, commercial or other enterprises.
Yatani said the merger, already approved by the Cabinet, was identified among critical reforms required to support manufacturing.
“It may be critical post-Covid-19 to provide assistance to industries,” the CS said in an earlier statement.
The Kenya Development Bank will be headed by a director general appointed by the bank’s board of directors in consultation with the Treasury boss.
The board with a chairman, appointed by the President for a three-year term, shall be tasked to run the bank.
Other proposed members are principal secretaries for Treasury, Industrialisation, Tourism, the Attorney General and four Treasury CS appointees.
Skills in industry, socio-economic development, business, commerce, finance, economics, engineering, accountancy, law or administration will be sought.
The team is set to approve credit for industries, advance, deposit and lend money as well as securities with industries as they deem fit.
The board will also guarantee industries “or become liable by way of surety or indemnity for the payment of money or performance of any contract.”
Terms of the current board members are set to end once the Bill is enacted while employees of the three agencies will hold positions in acting capacity.
“Any person who was an officer or employee of the former corporations shall continue to hold or act in that office as if appointed to that position under this Act,” the proposal reads.
Edited by Henry Makori