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Economy

House team faults PS inclusion in Uwezo Fund board

A House committee wants Executive representation in the management of the Sh6 billion Uwezo Fund trimmed to reduce the bureaucratic stranglehold in the administration of the fund.

The committee on Delegated Legislation which is scrutinising the Public Finance Management (Uwezo Fund) Regulations 2013 faulted the inclusion of the Principal Secretary (PS) Interior to the fund's management board.

The committee chaired by William Cheptumo said there was too much representation of the Office of the President in the fund.

“I don’t see why the PS Interior should sit in the enterprise. I don’t see a security issue on issues enterprises. Let us remove the PS and put more youth and women in the board given that the fund is for them,” said Kabando wa Kabando (MP Mukurweini).

The MPs also proposed the removal of Devolution and Planning Cabinet secretary Anne Waiguru and President Uhuru Kenyatta’s discretionary powers to appoint persons to the board without the involvement of Parliament.

According to the regulations, the Uwezo Oversight Board consists of a chairperson nominated by the Devolution minister, principal secretaries responsible for youth and women, finance and interior, two persons appointed by the Cabinet secretary, a person with disabilities and a representative of religious institutions.

“We must remove representation of religious institutions in national institutions…this will set a bad precedence and questions will arise as to which religion should nominate the person,” Mr Cheptumo said.

President Kenyatta launched the fund on September 8 whose main purpose is to expand access to credit to promote youth and women business and enterprises at the constituency level thereby enhancing economic growth towards the realisation of the goals of Vision 2030.

The fund is aimed at generating gainful self-employment for the youth and women. It models an alternative framework in funding community driven development.

The Uwezo Fund, according to the regulations that the ministry presented to Parliament last week, will employ the principals of table banking and revolving funds to create a unique blend of financing for youth groups.
It will be disbursed at the constituency level modelled along the Constituency Development Fund framework.

“This will enable women and youth to access the fund at the local level thereby reducing the transaction costs that they would have otherwise incurred,” the explanatory memorandum accompanying the regulations prepared by the Ministry of Devolution and Planning states.

From a total of Sh6 billion, a one-off administration charge of three per cent (Sh180 million) will be deducted while Sh500 million will be earmarked for capacity building of groups. This will ensure that the recipients are capacitated on the skills, knowledge and market linkages necessary to run respective group enterprises.

The balance of the funds will be divided between all 290 constituencies with 75 per cent shared equally and 25 per cent being shared on the basis of poverty index for equalisation purposes.

“Of the total amount received per constituency, 20 per cent will be earmarked for religious institutions as a grant to administer to women and youth groups within their jurisdictions. The balance per constituency thereafter will be administered as a 75 per cent loan, and 25 per cent grant for each beneficiary group,” the memorandum forwarding the regulations says.

The monies will be payable only to a group from a minimum of Sh50, 000 and not exceeding Sh500,000 at a time.

The regulations, tabled under Section 13 of the Statutory Instruments Act, and section 24 of the Public Finance Management Act, indicates that the interest rate on the loan component of the Uwezo fund will be set annually and charged at between zero and a maximum of 1 per cent.

“The interest chargeable this financial year 2013/14 is zero,” the memo reads.

The fund will be administered on a first come first served basis depending on eligibility of the application and the total amount contributed by the group will form part of the requirements that will determine the total amount a group is eligible to receive.

Groups that are registered with the department of social services and registrar of societies and those that have been in existence for six months are eligible to receive funding whose repayment period depends on the amount of money borrowed, size of the group and the proposed plan for the loan.

The beneficiary groups will be allowed six month grace period before commencement of repayment and all loans components will be repayable with two years from the end of grace period.

Mr Cheptumo said if the committee approves the regulations as it is, the clerk will direct Treasury Cabinet secretary Henry Rotich to go ahead and apply the regulations to enable the funds to be disbursed to beneficiary groups.

Should it disagree with the regulations, the team will present a report to the National Assembly to annul the same.

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