A heated race is expected among top banks for a lucrative contract to keep billions of shillings in operating funds for the judiciary.
The judiciary is recruiting a custodian of the fund that was launched last year with the National Treasury in August depositing some Sh9 billion into the kitty’s half-year budget for the financial year 2022/23. In the 2022-23 budget, the judiciary was allocated Sh18.9 billion, a Sh1 billion increase from the previous year.
The Judiciary Fund was activated last July after years of delay to open an account at the Central Bank of Kenya (CBK). Article 173 of the Constitution established the Judiciary Fund to meet the administrative expenses of courts. The Judiciary Fund Act was passed in 2016 for the Judiciary to retain money that may accrue from investments, court fees, and levies. The failure to implement the fund had forced the judiciary to surrender cash collected every year from court fees and fines to Treasury.
The judiciary is now looking for a bank that will facilitate real-time payments into and from the fund and integrate its payment platform with other government payment services.
The system is expected to establish corporate banking services for the judiciary, enhance financial management services, and improve online payment services. It is also expected to streamline the processing of mortgages, car loans, and other commercial facilities for staff, provide real-time alerts to users by SMS or e-mail and enable a comprehensive audit trail to facilitate tracking of transactions.
The setting up of the integrated banking system will be implemented in two phases within a maximum period of 24 months.
Under the framework outlined in Article 173, the Chief Registrar will be required, every financial year, to prepare estimates of expenditure for the following year and submit them to the National Assembly for approval.
“Upon approval by the National Assembly, the expenditure of the judiciary shall be a charge on the Consolidated Fund and the funds shall be paid directly into the Judiciary Fund.”
This comes just days after the Nairobi Coffee Exchange (NCE) also invited commercial banks to express interest in a proposed payment system ahead of an April 30 deadline to implement the scheme, which is targeted at ensuring compensation to farmers within two days.
The NCE said it aims to introduce a Direct Settlement System (DSS) to facilitate efficient payment of growers’ proceeds as well as recovery of any other commitments owed by the grower to service providers.
DSS is popular among commodity traders because it enables transparency and predictability in payments.
In the new scheme, buyers will be required to deposit funds into the DSS after every sale of coffee at the auction or through direct sales. The DSS provider or the commercial bank will then be settling statutory charges, their own service provider’s fees, and all other liabilities.
At the moment, buyers pay money from sales of coffee to marketing agents, most of whom double as commercial millers — an issue that has been problematic over the years since some rogue agents withheld the money for months or failed to disclose to growers their service fees.
Apart from the bad experience with agents, farmers have also been inconvenienced by coffee cooperative unions which market coffee their behalf but delay remitting proceeds from sales.
In the new trading regulations, it is no longer mandatory for farmers to appoint a marketing agent and farmers will have their cash proceeds directly through banks.
Under the DSS system, a commodity exchange transmits trade details to clearing corporations on a real-time basis. BY DAILY NATION