NIC Bank Group managing director John Gachora. FILE PHOTO | NMG
National and county governments should fast-track payment of
arrears to contractors and suppliers to stimulate the slowing economy.
The
economy grew five per cent in the first half of last year, falling
short of a full-year government revised forecast of 5.5 per cent. The
2017 full year forecast has since been trimmed to under five per cent.
“The
only stimulus package required is for the governments (national and
counties) to pay their bills. Nothing more, nothing less,” said NIC
Bank Group
managing director John Gachora.
Mr
Gachora, who is also the vice chair of the Kenya Bankers Association
(KBA), said the release of funds owed to suppliers will provide a strong
tailwind for the economy.
“The economy is very slow, bank customers are suffering, SMEs
are closing in large numbers, and jobs are being lost. We need a
stimulus package,” he said. “But not in the old sense of the word, we
need debts to be repaid.”
Controller of Budget Agnes
Odhiambo lists 43 counties as having accumulated bills worth Sh35.84
billion in the 2016/17 financial year.
A
stimulus package usually works by injecting government funds directly
into key economic sectors with the aim of boosting employment and
spending.
Last November KCB’s
head
of corporate and regulatory affairs, Judith Sidi Odhiambo, said most
bank customers who have difficulties servicing loans had blamed county
governments for failure to pay contractors.
“Low
business volumes and difficulty in getting new contracts have led to a
decline in business fortunes,” Ms Odhiambo said. She said KCB was
talking to debtors and in some cases structuring repayment to ensure
debts are paid in good time.
“We also have other
options such as administration or receiverships, negotiated settlements,
sale of assets through private treaty and auctions.”
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