Politics and policy
House team asks AFC to blacklist loan defaulters
Posted Wednesday, July 25 2012 at 20:33
Parliament is seeking to have farmers who have defaulted on Agricultural Finance Corporation (AFC) loans blacklisted to stop the agency from sinking deeper into debt.
The Parliamentary Committee on Agriculture said that such farmers should only access new loans after paying what they owe or wait for 10 years before they apply afresh.
“AFC should target farmers who are known to service their loans while restructuring its operations. Those who do not repay should be blacklisted,” said committee chairman John Mututho.
The Naivasha MP said that the agency, which is the key financier of farming, will receive Sh700 million in the current financial year to write off some loans advanced to farmers who had defaulted on their payments.
The corporation has more recently been rendered unable to effectively perform its role or turn-around its operations due to the failure by farmers to pay billions of shillings they owe.
Mr Mututho said farmers with a history bad debt should not be considered for any waivers.
He spoke after top AFC managers failed to appear yesterday before the House committee where they had been summoned to explain what they were doing to change the agency’s fortunes.
The officials were reportedly out of the country attending a seminar and have promised to appear before the committee on Tuesday next week.
Committee member Victor Munyaka proposed that AFC should only concentrate on regions where there is less default.
Migori MP John Pesa said: “It is impossible to achieve food security if auctioneers are at the doors of farmers all the time.”
Mr Pesa added that the government should put in place structures that would see farmers who repay their loans get more money when they apply in future.
Mr Mututho called on farmers to emulate their counterparts in Nyanza Province who he said are among those with the best repayment records at almost 100 per cent recovery of loans advanced to them.
The committee will also be seeking information on assets owned by the Agricultural Development Corporation (ADC).
The ADC has lately been under scrutiny over allocation of huge tracts of land to private individuals.
Mr Mututho said that the committee will seek to ascertain the total assets of the corporation given reports that land belonging to the research institution had been illegally acquired or transferred to private individuals.
“We will seek to peruse and see documents of all assets and if there are those that were disposed of, we want to see the transaction documents,” he said.