Controller of Budget has blocked regional bloc from accessing funds until it is gazetted in accordance with the law.
Plans by 14 counties to establish the much-anticipated regional bank have hit a snag.
This is after the Controller of Budget Agnes Odhiambo declined to endorse expenditure for establishment of the Lake Region Economic Bloc Bank.
While 10 out of the 14 member counties had contributed Sh1.2 billion towards the bank project, Ms Odhiambo has denied the bloc’s transaction advisor from accessing the funds, leaving the initiative in limbo.
Each of the 14 member counties were to contribute Sh200 million towards the proposed regional bank by way of equity or shareholding.
The initial plan was to buy a majority stake in an existing bank and open the proposed Sh2.6 billion regional bank by last year which did not happen due to delay by some of the counties not remitting the contributions in time.
Ms Odhiambo is adamant that the bloc cannot be allowed to go ahead with the plan without a legal ceiling operationalising its activities.
Consequently, she has instructed the bloc’s chairman and Kakamega Governor Wycliffe Oparanya and the chief executive Abala Wanga to wait until it is officially gazetted in accordance with the law.
Yesterday, both Oparanya and Wanga confirmed the moratorium on the proposed bank, saying this had forced the counties to put on hold requests for allocation of funds for the flagship project.
‘’Some have contributed the full amount while others have paid about Sh100 million, which is half of the capital required,’’ explained Mr Abala.
The money has been deposited in a special depository account which was opened last year at the Central Bank as required by the law.
Under the current law, counties cannot pass or spend money without approval from the controller of budget.
Despite half of the counties having passed the bill to meet the legal threshold required to legitimise the bloc’s activities, it must first be gazetted.
The bloc plans to buy an existing bank where 14 member counties will pool their financial synergy to transact business as they seek to leverage their economies of scale.
So far, Kisumu, Kakamega, Kisii, Nyamira, Vihiga, Busia and Migori counties have endorsed the bills legitimising their bloc membership. Others are yet to do so.