Fourteen counties in western Kenya have set in motion plans to open their own commercial bank to help spur economic growth.
The counties that have come together under the Lake Region Economic Bloc say the bank would help bridge their financial requirements to supplement the Treasury’s remittances, which often delay and are inadequate.
To fast-tract their development agenda, the counties have engaged a former Kenya Commercial Bank chief executive officer, Martin Oduor-Otieno, as chief consultant for the initiative.
Mr Oduor-Otieno said the plan to establish the bank was in top gear.
He explained that a special purpose account had been created by the Central Bank of Kenya where each county was expected to deposit Sh200 million by August this year, to meet the Sh2.8 billion minimum reserve for a commercial bank.
The account, he said, had been created with the approval of the office of Controller of Budget.
After the Sh2.6 billion reserve amount is raised, the county chiefs will decide whether to start a new bank or buy majority shares in an existing bank.
“We aim to ensure that all county assemblies consider their contribution in their 2018-2019 budgets to enable us to roll out the regional bank,” said Oduor-Otieno.
He added that some counties had submitted funds while others had deposited part of the Sh200 million targeted.
The head of the Lake Region Economic Block Secretariat, Abala Wanga, said his office, which was being hosted by the Kisumu County government, was reaching out to more partners to help it meet its agenda.
Mr Wanga, who spoke during a consultative meeting, said officials were exploring the options of starting a bank or buying shares in an existing one.
“We will then leverage on the funds to engage the World Bank or other donors for support and expansion of the financial institution,” he said.
Wanga added that priority initiatives by the regional bloc within the first two years include upgrading of airstrips in all the counties and construction of a ring road to connect to other regions.