The Treasury has finally kick-started the public servants’ car loan scheme that has been lying idle at the Central Bank of Kenya (CBK) for five years, marking the first step in making public servants more mobile.
On Monday, the Treasury issued a notice allowing civil servants to apply for the cheap car loans through an online application.
Since 2015, the Treasury has been allocating millions to funds to the scheme and as of June last year the loan fund had hit Sh3.5 billion ($35 million), up from Sh2.83 billion ($28.3 million) a year earlier, drawing protests from the Auditor-General.
Auditor-General Edward Ouko was of the view that the billions should have been channelled to other items since the car loan benefit for State officers and other public servants had not disbursed loans since it was established in January 2015.
The government however, defended itself saying the development of a Web-based system to support online application had delayed the roll-out of the fund.
Under the loan scheme, applicants will be required to submit details on their job group, date of appointment to civil service, their net salary and list of beneficiaries, among other details. They will part with Sh1,000 ($10) as application fee.
Applicants will then submit details on their preferred model and the dealer to deliver the car. The car loan depends on job grade and comes with an annual interest rate of just three percent, which is way lower than the average lending rate of 13 percent.
The car loan is music to Kenya’s motor dealers who have been struggling to stay open in recent times due to low business.
All State officers excluding those in the Judiciary and Parliament staff and civil servants under the Public Service Commission are eligible to apply for the fund.
The five-year car loan is seen as one of the sweeteners that the state hopes would woo Kenyans into the public service sector, which in recent years has been competing with the private sector for top talent.
The idle cash, however, comes at a time when the government is struggling to balance its expenses amid below target revenue collection.