The Senate Standing Committee on Finance and Budget chaired by Mandera Senator Ali Roba Ibrahim met today to consider the Prompt Payment Bill and consider statements responses on Predatory Asset Based Lenders, Austerity Measures Imposed by IMF, and Alleged Kshs.1.3 Billion Fine for Defaulting SGR Loan.

The Prompt Payment Bill seeks to put in place a legal framework to facilitate prompt payment for the supply of goods, works and services procured by government entities both at National and County Level. 

A response by the Central Bank of Kenya on the Predatory Asset Based Lenders statement which had been requested for by Sen. Oketch Eddy Gicheru of Migori County was discussed by the Committee.

 From its response, the Central Bank of Kenya acknowledged the consumer protection concerns raised by the Migori Senator arising from unregulated lending.

 He further indicated that these concerns, among others, informed the enactment of the Central Bank of Kenya Amendment Act, 2021. 

The Amendment Act and the Central Bank of Kenya (Digital Credit Providers), Regulations, 2022, gazetted on 18th March 2022, provide licensing and regulation of unregulated digital credit providers by CBK, Implementation of the Regulations commenced on 17th September 2022. The concerns raised on the Predatory Asset Based Lenders are well covered within this legislative framework.

Sen. Hamida Kibwana had requested the Committee for a statement on the Austerity Measures Imposed by IMF. The Cabinet Secretary for National Treasury and Economic Planning in his response stated that the main goal of the Kenya’s Program with the International Monetary Fund (IMF) which was approved by the Executive Board of the IMF in April 2021 just after the onset of the Covid-19 pandemic, is to help stabilize the economy and set a basis for a resurgence of growth and shared prosperity. 

The Cabinet Secretary further explained that the IMF has not imposed austerity measures on Kenya since the program factors in, mutually agreed commitments that are implemented because they are necessary for the development of our Country.

Besides, the Cabinet Secretary for National Treasury and Economic Planning issued a response to Sen. Godfrey Osotsi’s request for a statement on the Alleged Kshs. 1.31 Billion Fine on the Government of Kenya for Defaulting on Standard Gauge Railway Loan. 

In his response, the Cabinet Secretary stated that the Government of Kenya through the National Treasury procured a loan on concessional terms from Export-Import Bank of China for the Construction of SGR.

 As per the Financing Agreement, the proceeds of the loan were to be on-lent to Kenya Railways Corporation, the implementing Agent of the Project (SGR). The GOK through the National Treasury executed Subsidiary Loan Agreements with KRC to on-lend the proceeds of the loan to implement the Project (SGR). 

He explained that the amount of Kshs. 1.31 Billion alleged in Kenya Railways Corporation Financial Statement is not a fine by Export- Import Bank of China to the Government of Kenya but it is arrears of principal loan amount and interest/penalties of the on-lent loan not paid by Kenya Railways Corporation to Government of Kenya. 

He added that discussions are on-going between the National Treasury and the Kenya Railways Corporation to explore ways of increasing the volumes of freight and optimizing costs of operating the SGR so as to make available additional revenues to enable KRC pays its loans to GOK.

Members present were:-

Sen. Faki Mohamed Mwinyihaji

Sen. Abdalla Shakila Mohamed

Sen. Tabitha Karanja Keroche