NAIROBI, Kenya, Jul 1 – The Government has this financial year set aside Sh3 billion as seed capital to establish a revolving fund to finance small and medium scale enterprises in the country, President Mwai Kibaki has said.
The President who was Thursaday launching the 3rd Kenya Commercial Bank (KCB) Rights Issue at the KCB Leadership Centre, Karen in Nairobi observed that the fund would enable a significant proportion of Kenyans, particularly in the informal and small and medium scale enterprises access financial services.
In this regard, the Head of State urged banks and other financial institutions to support the noble initiative by providing a minimum of five shillings for every one shilling contributed by the Government.
Contribution from the banks, the President said, will enable the Government realise a minimum of Sh15 billion initial capital for the fund.
“The small and medium scale sector is critical to the prosperity of the country’s economy as it forms the nucleus upon which the success of Vision Twenty Thirty will be founded”, noted the President.
President Kibaki, assured Kenyans that the Government will continue implementing reform initiatives aimed at expanding the financial resources available to this sector.
Ephasizing the importance of finance as an engine for economic development, the Head of State said that the Vision 2030 placed the financial sector at the heart of mobilising the resources required to achieve the country’s development agenda.
The President stressed the importance of strong and highly capitalised banks capable of mobilising substantial resources needed to roll out large scale investment projects necessary in creating the much needed wealth to uplift the living standards of Kenyans.
President Kibaki affirmed the Government’s commitment in pursuing policies that will lead to lower interest rates noting that cheaper credit will spur economic growth and help create more jobs for Kenyans.
On the East African Common Market protocol which came into effect today, the President urged Kenyans and fellow East Africans to take advantage of the opportunities brought about by integration of the East African Community to improve on their livelihoods.
He promised that the Government will continue to provide an enabling business environment that will entrench the growth of the regional economies.
“Today the East African Common Market protocol comes into effect. The protocol will enable the free movement of goods, services, labour and capital across the East African Community. This is, therefore, an opportune time for investors to take advantage and exploit the emerging opportunities in the region,” he said.
The President commended the Bank for extending its services to Uganda, Tanzania, Rwanda and Southern Sudan which he noted will go a long way in providing an integrated banking service across the region and urged other financial players to venture into the East African capital market.
“It is gratifying that the KCB rights issue is being offered across the region. This is in view of the cross listing of KCB in the Kenya, Rwanda and Tanzania Stock Exchanges. This will serve to strenghtern our regional capital markets”, President Kibaki observed.
The Head of State appealed to citizens in the region to start thinking like true East Africans to plan for the next step that will see the creation of the East African Monetary Union.
President Kibaki said he was optimistic that the Common Market Protocol would enable the region realize its goals of creating the most successful and integrated economic bloc in Africa.
Through the rights issues, KCB intends to mobilize an additional Sh15 billion to support the growth of its business operations in Kenya and the East African Region.
The Head of State observed that with the additional capital the Bank is seeking to raise, it will be the most capitalized financial institution in the country with a capital base of close to Sh35 billion.
President Kibaki congratulated the KCB Management for continuing to set the pace in the banking sector in Kenya and the region saying the rights issue was an important milestone in enabling the country realize its aspiration to be a regional financial hub under VISION 2030.
Speaking during the occasion, Deputy Prime Minister and Minister for Finance Uhuru Kenyatta pointed out that the Government recognized the role played by the financial sector in driving the growth of the country’s economy..
In this regard, the Deputy Prime Minister said the Government is working hand in hand with the financial sector in order to address the twin challenges of poverty and unemployment.
“The financial sector, by providing the lubricants to the economy, is particularly key in driving the growth of our economy and reduction of the twin problems of unemployment and poverty in the country,” the Minister for Finance said.
On youth empowerment, the Finance Minister said the Government is committed to developing programmes intended to empower and liberate the youth from poverty.
He said this financial year the Government has set aside in the National Budget Sh5 billion to fund a programme for empowering the youth.
“As part of this programme we have set aside funds for a credit facility to support micro-business enterprises, intended to benefit largely youth enterprises,” the Finance Minister said.
Other speakers included Central Bank Governor Prof. Njuguna Ndung’u, KCB Group Chairman Mr. Peter Muthoka and KCB Chief Executive officer Martin Oduor-Otieno.
The occasion was also attended by Head of Public Service and Secretary to the Cabinet Amb. Francis Muthaura and the Governor of the Central Bank of Southern Sudan Mr. Elijah Malok among others.