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Economy

Treasury kick-starts Civil Service car loan fund after 5-year wait

National Treasury building
The National Treasury building in Nairobi. FILE PHOTO | NMG 

The Treasury has kick-started the public servants’ car loan scheme that has been lying idle at the Central Bank of Kenya (CBK) for five years.

It issued a notice on Monday allowing civil servants to apply for the cheap car loans through an online application.

The Treasury has since 2015 been allocating millions to funds, leaving the car loan fund with Sh3.5 billion as of June last year, up from Sh2.83 billion a year earlier, drawing protests from the Auditor-General.

The State had last month said development of a Web-based system to support online application had delayed the roll-out of the fund.

Auditor-General Edward Ouko said the car loan benefit for State officers and other public servants has not disbursed loans since it was established in January 2015, arguing the billions should have been channelled to other items.

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The five-year car loan is seen as one of the sweeteners that should add to the allure of public service, which in recent years has been competing with the private sector for top talent.

Three percent

The car loan depends on job grade and comes with an annual interest rate of three percent — which is lower than the average lending rate of 13 percent.

The idle cash comes in a period when the government is struggling to balance its expenses amid below target revenue collection.

Mr Ouko says the amount could have been used for other more deserving cases.

The fund has since engaged the KCB Group #ticker:KCB to help manage the scheme.

Under the loan scheme, applicants are also required to submit details on their job group, date of appointment to civil service, their net salary and list of beneficiaries, among other details. They will pay Sh1,000 application fee.

Applicants will submit details on their preferred model and the dealer to deliver the car.

All State officers excluding those in the Judiciary and Parliament staff and civil servants under the Public Service Commission are eligible to apply for the fund.

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