Creation of mega bank to boost industries

Treasury Cabinet Secretary Ukur Yatani.

Treasury Cabinet Secretary Ukur Yatani’s efforts to establish the Sh100 billion Kenya Development Bank (KDB) by merging three struggling State institutions deserves support.

The proposed institution will have the potential to play a critical role in financing of Kenya’s manufacturing sector.

The consensus is that the development of this sector will help heal the economy after coronavirus is contained. Initially, KDB will be a wholly government owned agency, but hopes are that the State will see the wisdom of inviting outside investors to buy shares, as this would force the institution to be more transparent and accountable.

After all, the lack of these key attributes is what has led the three Development Finance Institutions (DFIs) namely Industrial and Commercial Development Corporation (ICDC), Industrial Development Bank (IDB) and Tourism Finance Corporation (TFC) into the kind of financial weakness, barely able to fend for themselves, leave alone lend money to others.

This has made them a perpetual drain on the national economy as they seek financial support from the government year in, year out.

Recruited locally

This explains the call on Parliament to support the Bill seeking to merge three financially weak institutions, but to insist that the workings of the new entity be as open and accountable as possible.

The individuals charged with the running of KDB must not only be as clean as Caesars’ wife, but they must be forced to operate along the same lines as similar institutions operating in the private sector, not just in Kenya but globally.

In the event that it becomes necessary, the government should not shy away from recruiting key personnel from outside the country as a way of shielding them from the kind of pressure common to those recruited locally. This usually compromises their work and the ordinary Kenyan is always the loser.

The ease with which the government has been able to attract funding for President Uhuru Kenyatta’s Big Four agenda, particularly housing and universal healthcare, is an indication that it will have little difficulty in getting the money it requires to finance KDB.

In addition, well-heeled and ordinary Kenyans have in the past demonstrated their willingness to invest their money in well-defined projects.

This leads to the conclusion that the government could easily raise from the public the full amount it needs to set the ball rolling. The only issues that require closer interrogation is how the new institution will be run and how an investor can get his money back.

[Mbatau wa Ngai, [email protected]]