The government is planning to merge three banks create a proposed State bank with Sh100 billion shares.
The plan was revealed in regulations published by the National Treasury for the Kenya Development Bank (KDB), five years after President President Uhuru Kenyatta received the report from the Task Force on Parastatal Reforms.
Kenya Development Bank Bill, 2020, will seee the merger of the Industrial and Commercial Development Corporation (ICDC), IDB Capital and Tourism Finance Corporation is now close to completion.
The state will own all 20 billion shares that will be issued for the development of the financial institution, with a face value of Sh5 each inline with the regulations that have been presented for public participation.
The government did not make it public how Sh100 billion would be injected into the bank directly since part of the lender’s capital will be appropriated by the national assembly.
The bank will lend to businesses for industrial growth at lower rate than in the markets today in an efforts to scale up economic growth.
“The merger of the three DFIs (development finance institutions) has been identified as one of the critical reforms required to support the manufacturing deliverable under the Big 4 Agenda, and may be critical post-Covid-19 to provide assistance to industries,” said Finance Secretary Ukur Yatani.
Amb. Yatani said that a task force comprising of senior officers from the Treasury, ministries of Tourism, and Industry, Trade & Enterprise Development, the Attorney General and the three DFIs drafted the bill to facilitate the merger.
The team led by Yatani through a press release invited comments, seek views of stakeholders and participation of the public according to the constitution.
“However, in view of the public health threat of Covid-19, and the presidential directive on this matter made on March 17, 2020, no public hearing or oral submissions will be held” the notice continued to read.
The proposed merger is meant to remove overlaps, duplication and redundancies,hence trimming the current number of state corporations from 262 to 187, as recommended by the task force.
But the state has only managed to merge parastatals in agriculture by establishing the Agriculture and Food Authority (AFA).