Parliament has stopped creation of a State-owned lending agency dubbed Biashara Kenya Fund that was to offer loans to women, youth and small businesses at six per cent interest.
The Committee on Delegated Legislation says in a report tabled in the House that the Public Finance Management (Biashara Kenya Fund) Regulations 2019 contravene various sections of the law and recommends annulling it in entirety.
The regulations were to lead to the merger of Uwezo Fund, Youth Enterprise Development Fund (YEF) and Women Enterprise Fund (WEF).
The committee says the new law was not subjected to detailed public participation and that legal changes creating the fund should have been done via a new law and not amendments to existing regulations.
“The merger of the three funds seems speculative and does not provide any tangible strategies to address the challenges facing the current funds. If adopted, the merger will result in the loss of identity for women and youth and likely marginalise persons with disability,” the committee says in the report which was tabled in the House by chairperson Gladys Shollei.
The committee wants the Treasury to reform the three funds—Uwezo, YEF and WEF—instead of the merged entity, which it argues exposes use of public funds by private banks and lacks watertight rules on dealing with defaulters.
At six per cent, the groups were to borrow from Biashara Kenya Fund at half the prevailing commercial lending rate of 13 per cent. Private sector credit growth has been sluggish since the government capped commercial lending rates at four percentage points above the central bank rate in September 2016.