The proposed merger between Commercial Bank of Africa (CBA) and NIC Bank has the potential to benefit the country.
This is provided the government persuades top managers of the new entity to sit down with their counterparts from other leading banks to craft a new banking model that would kick-start the sluggish economy.
This is in light of the fact that the rest of the economy is struggling as a result of tightened credit, especially to the private sector mainly on the rate cap law.
The sectors hardest hit and that could do with a fresh infusion of capital include manufacturing, building and construction, mining and quarrying and agriculture.
Manufacturers are also under siege given the ever-increasing number of taxes and levies — including the latest one on housing — and require the government’s reassurance and assistance in securing fresh credit.
Perhaps, President Uhuru Kenyatta may realise that while ministries may be good at implementing policies, they are yet to come up with innovative ways to lift the country’s economic growth to levels envisaged in the Vision 2030.
The president may require to be persuaded too of the need to expand the country’s manufacturing base by borrowing a leaf from the industrialised countries such as Japan, South Korea and China. These countries erected walls to protect their local industries jointly financed by the public and the private sectors. Banks played a particularly key role in mobilising the funds required for investment.
The most logical place to start would be to set up state-of-the-art factories to manufacture many of the low-technology goods that are currently imported from China and India. This strategy would greatly benefit the country even in instances where the raw materials would have to be imported. The other key area that needs improvement is that of exports. Unfortunately, this is an area where officialdom has perfected the art of increased motion without movement.
How else, can the country’s failure to take adequate advantage of the American Growth Opportunity Act (AGOA) be explained?
Logic dictates that Treasury be compelled to set aside funds to finance start-ups that would manufacture export goods, especially non-apparels.
[Mbatau wa Ngai, [email protected]]
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