New Lake region bloc mulls bank acquisition to boost economic growth

Governor Wycliffe Oparanya says the lender would be structured to provide credit facilities to the pillar sectors of Western region's economy. [photo: Chrispen Sechere/standard]

An existing commercial bank could be a target of acquisition by the Lake Region Economic bloc made up of thirteen counties, Kakamega Governor Wycliffe Oparanya has said.

The governors of the counties had agreed in principle to set aside seed capital amounting to Sh2.6 billion, or Sh200 million each, that would be spent on the acquisition.

Another option the governors are pursuing would be setting up of a regional bank from scratch – an option that would, however, be lengthier and more tedious.

"We are in the process of establishing a fresh bank or buying into the existing one so long as the focus will be on the region," Mr Oparanya told The Standard Group's television station KTN. He wasn't specific on which option was most popular among the governors.

"It will have branches across the country but the focus should be in the Western region," he added, lending credence to the likelihood of an acquisition rather than taking the longer route. His sentiments were the strongest indication yet how rapidly the regional bloc is taking shape.

Already, the bloc bringing together the ten counties that were previously districts of Nyanza and Western provinces, plus Trans Nzoia, Kericho and Bomet, has identified respective economic advantages that they will be exploiting under the bloc. "It is projected that the regional bank would take the form of a development credit lender more than the typical commercial bank," Oparanya said.

The lender would be structured to provide credit facilities to the pillar sectors of the Western region economy – mostly agriculture and agri-processing. Tourism facilities and infrastructure projects would also be targets for lending.

ECONOMIC BLUEPRINT

Oparanya said leaders of the region had approached the World Bank for financial assistance, that could also include expertise in operating the development bank. While it was not immediately clear what timelines the county leaders were working with in setting up the regional bank, consultancy firm Deloitte has drawn up the economic blueprint for the bloc.

President Uhuru Kenyatta formally launched the blueprint last month during the devolution conference in held in Kisumu. A total of seven sectors were identified in the blueprint, which also identifies a flagship project under every pillar of economic activity. An agricultural commodities exchange has been proposed to help in ensuring the farmland produce from the counties gets good and predictable prices, while a Lake region Tourism Circuit would be created to map out all the activities and attractions for prospective visitors.

Tourists would buy into the package rather than visiting individual attractions in the region. Governors are also expected to jointly map out how they will develop road infrastructure projects, which cut across the boundaries of a specific unit.

Discussions were also ongoing on how the counties would work together on revenue collection. Oparanya told KTN that the regional bloc has critical mass in terms of population, estimated at about 10 million, which would provide a larger market for goods and services produced within the region.