NAIROBI, Kenya, Mar 3 – The establishment of sector based banks maybe the best solution to stimulating more local investment in the country, experts said on Tuesday.
Kenya Investment Authority General Manager, Kennedy Manyalla, said lack of banks that focus on growing particular sectors in the country is impeding Kenya’s economic growth.
He said such banks would focus on providing finance for particular areas of interest or business initiatives thus financing packages would be tailored to particularly suit them.
“Its clients would simply be people who are particularly engaged in that sector, who have needs to finance development in those sectors, the sectors are profiled and it’s known that this is the kind of population that such a bank will support,” Mr Manyalla explained.
He observed that for such an initiative to work well the government must be involved.
“People are saying that government needs to come out of such aspects of services but in a country like Kenya that requires to take off, the government must be involved,” he said,
Speaking to Capital Business, Mr Manyalla said initiatives like the Venture Capital had worked well in economies like India, which has on average been registering a seven percent growth per quarter.
“How it worked is that if lets say I needed machinery for my business the particular bank didn’t give me the money but bought the machinery as a form of assurance, so by the time I start making money I plan to buy that machine to own it,” Mr Manyalla said.
He said that it was unfortunate that most banks in the country that were established on a microfinance platform were operating like commercial banks, thus deterring growth in the micro and small enterprises sector.
Mr Manyalla also accused Members of Parliament for acting as a stumbling block in seeing through the country’s economic agenda. He said Parliament was not playing its role in supporting economy friendly legislation effectively.
“Parliamentarians must assist the government in working out policies that will support economic development; they must understand the structure of an economy and the way it flows so that they engage the government correctly.”
“So far what we have seen in public is that they want to catch the thief, yet somebody else constitutionally has that role,” he added.
Mr Manyalla observed that information between the government and Parliament seemed not to be flowing efficiently making it difficult to see the country’s economic agenda through.
He said Parliament should understand how the economy worked so that it could appreciate.
“Right now as we speak we want them to get on top of it, get to understand the Vision 2030 and how they can engage the government positively to be able to move the country forward.”
“Remember they’re just there for five years and they will require the same policies to support the kind of businesses you want to run once you are out here,” he added.
The investment official revealed that the agency had been receiving a lot of inquiries despite the current economic global downturn.
He said inquiries on investment in the tourism sector top the list, but a lot still needed to be done to convert these inquiries into actual investment.
“We need to have a proper investment plan for the industry and more so improve infrastructure, which is turning out to be major deterrent in attracting new investors into the country” Mr Manyalla said
Just recently the government launched a successful infrastructure bond to raise Sh18.5 billion to be used to finance various infrastructure projects in the country.