Kenya retreats on plans to merge financial sector regulators
Kenya has suspended its plan to merge key state-owned corporations in a programme that could have saved taxpayers millions of dollars.
The reform programme, which would have merged four financial sector regulators into a single authority, was suspended by the Cabinet last year.
The decision came after the Cabinet had approved the draft Financial Services Authority Bill (2016), which was designed to merge the functions of the Capital Markets Authority (CMA), Retirement Benefits Authority (RBA), Insurance Regulatory Authority (IRA) and Saccos Societies Regulatory Authority (SASRA) in order to save on operational costs and improve efficiency in the regulation of Kenya’s financial sector.
Nzioka Waita, State House chief of staff and head of the Presidential Delivery Unit, told The EastAfrican that the merger of the four regulatory authorities has been put on hold, but did not say why.
“The Cabinet put it on ice about a year ago. It is not on the cards at the moment. It will be relooked at in the context of a wider reform programme of government-owned entities,” said Mr Waita.
However, government sources told The EastAfrican that vested political and economic interests scuttled the ambitious parastatal reform programme, which sought to merge and abolish underperforming state-owned enterprises.
“They were good reforms, but they have not been implemented. There is the issue of vested interests as nobody wants to be grouped together with the other, and the fear of job losses because a single financial sector regulator will be managed by only one chief executive and yet currently we have four chief executives,” said the source.
The aim of the financial sector reforms was to provide consolidated supervision of financial services, and to increase protection of consumers of financial services.
The merger of the four regulators was to rationalise the operations of parastatals by removing overlaps, duplication and redundancies to eliminate wastage of public funds, enhance efficiency and bolster productivity.
Last year Auditor-General Edward Ouko said taxpayers could lose more than Ksh30 billion ($300 million) in loans borrowed by state corporations and reported differently in official government records.