State-owned agricultural agencies form the bulk of the institutions which are unable to service loans disbursed to them by the National government during the 2017/18 financial year.
National Treasury Budget Summary for 2018/19 released last week indicates that 11.2 per cent of the total Sh794 billion loans advanced to State agencies have been classified as inactive. The non-performing loans during the period in the agricultural sector stood at Sh6.09 billion. Some of the agencies had not paid even a single cent despite having the loans for a while.
Most of the firms unable to pay are sugar companies and those related to the industry.
The companies include Ramisi, Miwani, Mumias, Sony Sugar and Nzoia. The sugar companies have been on the restructuring board for a long period but the process has not taken off due to huge debt.
Mumias, for instance, has disclosed its debt problems, saying it is betting on the national government’s support to restructure the liabilities.
They are in default on both the principal and interest repayments. Deputy President William Ruto said recently that the government was ready to surrender its stake in five sugar factories in the country as a measure to streamline the management of the sector. He said the government was looking into ways of expediting privatisation of Miwani, Muhoroni, Nzoia, Sony and Chemelil sugar factories.
Speaking during a consultative meeting on the privatisation of the sugar factories, Ruto said the manner in which the factories were being run calls for the re-energising of the management.
Key agricultural agencies which had been classified in the non-performing loans category include sugar factory Ramisi (Sh15.8 million), Coffee Board of Kenya (Sh725.5 million), Cotton Lint and Seed Marketing Board (Sh22.63 million), East African Sugar Industries Ltd Muhoroni (Sh177.1 million) and Halal Meat Products (Sh27.7 million).
Others are Illdamat Farmers’ Co-operative Society (700,000), Kenya Fishing Industries Ltd (Sh2.8 million), Kenya Meat Commission (940.24 million), and Meru Central Farmers’ Co-operative Union (Sh188.32 million.