State lenders face probe ahead of merger to mega bank

Parliament wants six State agencies earmarked for a merger probed before they are collapsed into one mega bank.

The newly established Special Funds Accounts Committee said it will start investigations into the accounts of the funds to ensure that no public money is lost.

“These are different funds that are being managed by various accounting officers. We need to know what the State corporations and funds have in their accounts,” Kathuri Murungi, who chairs the committee, told MPs on Wednesday.

The government in mid-January announced the start of the consolidation process of the financial organisations as it looks to merge several agencies which sometimes perform overlapping roles.

The institutions targeted for a merger include Uwezo Fund, Youth Enterprise Development Fund, Women Enterprise Development Fund, Development Bank of Kenya, Industrial Development Bank of Kenya and Kenya Industrial Estates.

Mr Murungi said the merger should not be rushed before investigations to ascertain the amount of money each holds.

“This institutions have given loans to individuals and we need to know how much has been recovered, what is outstanding and how it will be recovered once they are merged. If they are merged before recovering outstanding monies, how and when will they be recovered?” Mr Murungi asked.

READ: Govt to merge KIE, Uwezo fund and others into mega bank

Nairobi women representative Esther Passaris said the committee should seek to protect accounts of the corporations before the merger.

The government said the planned merger is aimed at increasing efficiency, resolving overlaps and making better use of State resources to achieve economies of scale.

In order to make the merger and transition seamless it has established an inter-agency taskforce to review the regulatory and institutional framework involved in the process.

The taskforce has already issued interim orders as it completes its work. Head of Public Service Joseph Kinyua issued a circular to the affected agencies informing them of the decision.