State to audit Ksh4B debt owed by coffee farmers
The government has initiated a forensic audit of the Sh4 billion coffee farmers owe various value chain players for years.
Co-operatives and Micro and Small Enterprise Cabinet Secretary Simon Chelugui said the government is contemplating waiving another phase of debts coffee farmers’ owe various actors in the country.
“We are currently undertaking forensic audit data we have received from Co-operative Bank, co-operative unions, and commodity fund. The aim of the verification process is to ascertain the true picture in terms of the amount overdue and whether there are debts that were waived last time,” he said.
Chelugui confirmed that once the verification process is concluded the ministry will prepare a memo to the cabinet for discussion and approval. The approval by the cabinet, the CS added will give the National Treasury and Planning Cabinet Secretary the go ahead to officially waive the debts.
The debt waiver programme was initiated by the former administration of President Mwai Kibaki in 2006 as part of helping local farmers overcome challenges hindering their growth. Between 2006 and 2019 the government waived Sh12.2 billion, though value chain players claimed the written-off debts and other reforms enacted have not motivated desired growth in the subsector.
The government waived Sh5.8 billion Stabilisation of Export Earnings (STABEX) to Co-operative Bank, money that had been granted by the European Union (EU) under a compensatory finance scheme to stabilise export earnings of the African, Caribbean and Pacific Group of States (ACP).
Kibaki’s administration further wrote-off Sh4.7 billion farmers owed the rural Savings and Credit Cooperative Societies (Saccos) and farmers’ co-operative unions in 2010. Co-operative Bank was further paid Sh1.7 billion in the former president’s second term.
Financial woes
Chelugui hailed the executed debt programme by the former regime but hastened to add that farmers are still reeling under financial woes, a situation that has discouraged most of them to stop farming the crop.
Since then farmers have incurred more debts which are still frustrating their efforts in the subsector.
“Through forensic audits, the government will be able to find out how much debt the farmers are grappling with. The findings of the audit will inform whether another waiver will be granted or not,” he added.
He explained that the Government is determined to bail out coffee farmers from the increased debts as part of assisting them to boost production. “A good number of co-operative unions have been operating dismally due to their financial challenges and thus denying them an opportunity to undertake business opportunities in local and international markets,” he added.
Recently while touring various co-operative societies in Murang’a County Deputy President Rigathi Gachagua confirmed the government’s plans to write off debts owed by coffee cooperative societies.
“Our farmers should expect good news from the talks we are going to have. The president has goodwill towards reviving the coffee sector and one way of doing so is to write off all the loans owed by farmers.” He added that after commissioning Murang’a Farmers Coffee Mill at Maragua urban centre last month.
