Kakamega County Microfinance has halted lending money to the small and medium-sized enterprises (SMEs) across the county through the County Trade Loans Fund that was initiated in the financial year 2015/2016 by the ministry of Trade, Tourism and Industrialization.
This has been prompted by the alarming increase of defaulters among the previous beneficiaries.
Out the Kshs. 100 Million budgeted for the Fund, Kshs. 70 Million was disbursed and only about Kshs. 39 Million had been recovered by the end of the financial year 2017/2018.
According to the Auditor General’s Report, the financial statement for the financial year under review was not accurate and that it did not conform to the Treasury requirements pertaining operationalization of the Fund.
The Chief Officer in the said ministry, Mr. Fanuel Wemali Angaya said the move will help the concerned department put in place structures that will help in minimizing cases of loan defaulting by beneficiaries.
“We already have got a board in place to that effect which is drawing a plan and will come up with regulations that will guide the Microfinance,” said Mr. Angaya.
He was responding to questions raised by the County Assembly Public Accounts and Investments Committee (PAIC) from the Auditor General’s Report FY 2017/2018.
Admitting the discrepancies in the financial statement, the Ag. CEO of the Microfinance, Mr. Kulati Wangia attributed it to lack of proper structures that could guide the department on how to recover the disbursed money.
Mr. Wangia further added that improper reconciliation between the department and the Kenya Commercial Bank (KCB) that was managing the disbursement, a situation he said was being corrected by the department.
The committee, however got concerned as to why it had taken long to rectify the situation.
Officers were urged to be making frequent consultations with the office of the Auditor General so as to avoid recurrence of audit queries that could have been.
Others who attended the meeting were; Mr. Joshua Omutuku and Mr. James Peter Kamau from the office of the Auditor General.