Government has been supporting MSMEs through various affirmative action funds including the Uwezo Fund, Youth Enterprise Development Fund, and Women Enterprise Development Fund. To increase efficiency, eliminate overlaps, and give special priority to businesses owned by youths, women, and people living with disabilities, CS Henry Rotich while reading the budget statement in June this year noted that the three Funds will be consolidated into one to be known as Biashara Kenya Fund.
In a public notice published by the National Treasury, the new fund will draw its portions from allocations made to it by Parliament, income from investments it makes, grants and donations from different State partners. Already, the government made a Ksh 2 billion allocation to it in the 2018/19 financial year.
However, the parliament through a Committee on Delegated Legislation in a report tabled in the House said that the Public Finance Management (Biashara Kenya Fund) Regulations 2019 contravene various sections of the law and recommends annulling it in entirety.
According to the committee, the new law was not subjected to detailed public participation and that legal changes creating the fund should have been done via a new law and not amendments to existing regulations, which wants the Treasury to reform the three funds, Uwezo Fund, Youth Enterprise Fund and Women Enterprise Fund, instead of the merged entity, which it argues exposes use of public funds by private banks and lacks watertight rules on dealing with defaulters.
“The merger of the three funds seems speculative and does not provide any tangible strategies to address the challenges facing the current funds. If adopted, the merger will result in the loss of identity for women and youth and likely marginalise persons with disability,” read the committee report tabled in the House by chairperson Gladys Shollei.
Administration of the new state-sponsored development fund was to be overseen the fund’s advisory board as per the new rules. A Chief Executive Officer appointed by the Gender Services Cabinet Secretary was to undertake the day to day administration of the fund and a Board of Directors was to review the financial performance of the fund before submitting its financial statements to the Auditor General.