This archive report was first published on 16 June 2020.
On June 16, 2020, Treasury Cabinet Secretary Ukur Yatani's proposal to establish the Sh100 billion Kenya Development Bank (KDB) by merging three struggling State institutions was met with support.
The proposed institution has the potential to play a critical role in financing Kenya's manufacturing sector, which is crucial for healing the economy after the COVID-19 pandemic.
Initially, KDB will be a wholly government-owned agency, but it is hoped that the State will invite outside investors to buy shares, making the institution more transparent and accountable.
This is because the lack of transparency and accountability has led the three Development Finance Institutions (DFIs) - Industrial and Commercial Development Corporation (ICDC), Industrial Development Bank (IDB), and Tourism Finance Corporation (TFC - into financial weakness.
As a result, they have become a perpetual drain on the national economy, seeking financial support from the government year in, year out.
Therefore, Parliament is urged to support the Bill seeking to merge the three institutions, but with the condition that the workings of the new entity be as open and accountable as possible.
Key personnel running KDB must be clean and operate along the same lines as similar institutions in the private sector, both locally and globally.
Recruitment of personnel from outside the country may be necessary to shield them from local pressure, which can compromise their work and ultimately affect the ordinary Kenyan.
The government's ability to attract funding for President Uhuru Kenyatta's Big Four agenda, particularly housing and universal healthcare, indicates that it will have little difficulty in getting the money required to finance KDB.
Well-heeled and ordinary Kenyans have demonstrated their willingness to invest in well-defined projects, making it possible for the government to raise the required funds from the public.
However, closer interrogation is required to determine how the new institution will be run and how an investor can get their money back.
