Governors in western Kenya have received approval to set up a Sh1.1 billion bank after their county assemblies agreed to allocate funds for the venture.
Each one of the 11 counties involved in the plan is to remit Sh100 million as start-up capital for the bank to be headquartered in Kisumu County.
The bank is the brain child of the Lake Region Economic Bloc that brings together the counties of Western, Nyanza and parts of Rift Valley.
Kisumu Governor Jack Ranguma, chairman of the bloc, on Sunday told the Nation that the counties are now mulling over whether to buy an existing bank as opposed to starting a new institution from scratch.
“We have begun the process of acquiring a banking institution. The regional bank will be wholly owned by the residents of the lake region,” he said.
“The respective counties have shown their commitment to remitting the agreed payments,” he added.
The approvals by the assemblies were part of guidelines issued by the Controller of Budget Agnes Odhiambo last October.
It will involve the counties of Kisumu, Siaya, Homa Bay, Kisii, Nyamira, Migori, Bungoma, Kakamega, Vihiga, Busia and Kericho.
Mr Ranguma said the bank is one of the economic pillars the bloc is trying to establish.
Others include setting up of two regional referral hospitals in Kisii and Kisumu counties.
“These are two out of our seven pillars that have set sail and whose results are imminent. We are still developing more concepts alongside what counties are doing,” he said.
The bank, according to the counties’ leadership, will enable them borrow loans, access grants and create wealth in the regions.
Kakamega Governor Wycliffe Oparanya said they had approached the World Bank for financial assistance, which could also include expertise in operating the development bank.
“It is projected that the regional bank would take the form of a development credit lender more than the typical commercial bank,” Mr Oparanya said in an earlier interview.
They also seek to use it to avert the perennial shortage in disbursement of funds from the National Treasury.
Mr Ranguma said they had also set up a secretariat for the bloc.