No more debt writeoffs for defaulting societies, says Kagwe

WANGARI MWANGI-KNA

Agriculture and Livestock Cabinet Secretary Mutahi Kagwe has cautioned farmer co-operative societies against taking loans without clear repayment plans, warning that the government will no longer continue writing off debts that fail to meaningfully benefit farmers.

Kagwe says that the government has put in place stricter accountability measures that will be enforced across all agriculture value chains, with the hope of bringing an end to the era of repeated bails outs by the government.

However, the CS said the government was in the process of writing off debts in the coffee, tea and sugarcane sub-sector.

But then again, he emphasised that the intervention is not tenable and cannot continue indefinitely.

“I think it is important for us to appreciate that the government does not have infinite money for write-offs, when we do not even know or you cannot audit what that money was spent on,” he said.

“The problem is that the state is not able to plan for debts because they are endless and as a government, you are not planning for losses. So you cannot be able to say that in two years this is the amount of money you need for a debt write-off.

"That is why I am saying the only way to deal with this is to eliminate the concept of debt writeoff,” he said.

The CS cited examples in the coffee sub sector, where he noted many factory directors had borrowed loans beyond their capacity to repay and without knowledge of the farmers.

Kagwe lamented that the trend was so bad that the directors also lacked a business plan and accountability mechanisms, a situation he said had left the factories financially crippled.

While reassuring coffee farmers that the government would settle their Sh 6.8 billion debt, Kagwe also said that the enactment of the Coffee Act 2026 will address some of the fiscal management challenges that have long crippled the sector.

He told the farmers that the new law has proposed the formation of a Coffee Board, whose responsibility will include auditing the purpose of the loan, establishing who the beneficiaries are and how the cooperative will repay the loan before granting approval for a loan to be taken up on behalf of the farmers.

“We will also not allow people to commit innocent farmers to repay loans taken up in their name. We must know the purpose of the loan, and once the project for which the loan was taken up is complete, the beneficiaries who are the farmers must be invited to approve the project.

"Therefore let us agree, the government will not allow you to take a loan without a repayment plan,” said Kagwe.

The CS also raised concerns over the weak governance in cooperatives, noting that poor leadership is to blame for the endless woes that have bedeviled the sector.

To reverse the bad reputation, Kagwe urged farmers to demand for better management and transparency from their officials.