By Brian Ocharo
The Institute of Certified Public Accountants of Kenya (ICPAK) has expressed fears that Kenya Kwanza’s proposed Hustler Fund kitty risks eroding existing funds such as the Uwezo Fund for the youth and women.
Speaking during their 39th annual conference in Mombasa, the ICPAK council called on President William Ruto to keep the existing funds that have supported young people and women in the past but impose proper accountability mechanisms.
“We urge that the existing funds be tailored towards the specific areas where they can still benefit youth and women,” said ICPAK chairman George Mokua.
President Ruto has announced plans to activate the Hustler Fund from December 1. It is intended to offer cheaper credit for small businesses.
The credit facility will be disbursed through mobile phone applications and will attract 10 percent annual interest. Once rolled out, the Sh50 billion annual fund is expected to support micro, small and medium enterprises (MSMEs).
It will provide affordable loans with lower interest rates to small businesses such as motorcycle transport operators, women and youth-owned businesses.
But even as the Kenya Kwanza administration plans to roll out the kitty, ICPAK feels the Uwezo Fund, a flagship programme for Vision 2030, risks being eroded.
The Uwezo Fund was rolled out to enable women, youth and people with disabilities to access finances to promote their businesses.
Even as ICPAK asked the President to preserve and keep the kitty in operation, they called for a quick rollout of the Hustler Fund to cushion small businesses, which are still suffering from the effects of Covid-19.
Mr Mokua said some businesses closed completely during Covid-19 pandemic and need support to bounce back.
“We also urge that the Hustler Fund be rolled out as quickly as possible to the MSMEs that are already feeling the heat of Covid-19 ramifications,” he said.
On the issue of pending bills, ICPAK attributed the rise in unpaid bills to counties disregarding directives from the Office of the President and the National Treasury to clear arrears in a bid to ease cash flow problems in the private sector.
“The ripple effect is that several Kenyan small and medium-sized businesses bidding for government contracts are quickly being edged out of business because of … liquidity challenges,” he said.
ICPAK has also decried delayed payments, saying they have hit the financial sector and lenders are saddled with non-performing loans, which have jumped to new highs due to Covid-19.
“There is a need for objective audits and clearing to inject liquidity into MSMEs. We would like the government to ensure that these pending bills are settled to avert a financial crisis,” Mr Mokua said.
Recent data from the controller of budget shows that several counties, led by Nairobi, have amassed billions in pending bills from the last financial year.
Suppliers are the most affected, with their properties exposed to auction, said ICPAK council member Georgina Malombe.
“Most suppliers get resources from financial institutions to deliver on services and products, so when you deny them that liquidity, that is like blood running their business, that means their business will be edged out and closed,” she said.
“Banks and lenders also want their money paid on time [or] they may auction property used as collateral for the loan.”
She urged counties to settle pending bills as had been directed by President Ruto to spur economic growth and revive businesses that are already dying.
The council maintained that pending bills are not as a result of lack of funds but misuse of resources and disregarding directives to clear the arrears.
“There is nothing like there is no money to pay. President Ruto said in September that we have a half a trillion shillings that are out there in pending bills. If this amount was to be released to the market, you can imagine how business could flourish,” she added.
On reforms in the education sector, ICPAK welcomed President Ruto’s move to set up a task force but warned that this should not be used to reverse the gains made in the sector.
Mr Makua noted that in the history of Kenya, many task forces have been used to drive agendas other than those expressed.
“The objective of the reforms should, therefore, be to improve access, equity, quality and relevance of education and training at all levels,” he said.
Acknowledging that national policies are the roadmap to successful educational reforms, the council said the recommendations of the task force should help Kenya improve its education sector without compromising the foundations already in place.
“We urge the task force to also focus on sustainability issues as they make reforms in the education sector,” he said.
More than 2,500 accountants are meeting in Mombasa for their annual seminar, which brings together members from Burundi, Rwanda, Uganda, Tanzania and Somalia.