State sets aside Sh12bn for 2017 maize subsidy debt

The Treasury has set aside 12.7 billion in the supplementary budget for paying millers who supplied maize under the 2017 subsidy as well as to settle the penalties due on a breach of contract after the State failed to honour the agreement.

The money comprises the principal amount and accumulated interest on pending bills to millers. This is the first time that the government has laid bare the extent of the hit on taxpayers in footing these bills.

“The current expenditure reflects an increase of Sh11.7 billion consisting of additional Sh12.7 billion for settlement of pending bills under the Maize Subsidy Programme and outstanding legal claim for breach of contract, and a reduction of Sh1 billion on account of rationalisation of budget and excess provision for salaries,” reads the supplementary budget on the allocation for the State Department for Crop Development and Agricultural Research.

The Ministry of Agriculture had contracted nine millers to import and sell maize to the State under the subsidy programme to lower the cost of flour that had hit a high of Sh150 for a two-kilo packet.

The payments were to be completed at the end of 2017.

Millers were forced to move to court in 2019. At the end of 2017, the State owed the processors Sh2.3 billion, an amount that millers said had ballooned to Sh5 billion.

The government has so far paid only Sh3 billion to five millers, leading to an outcry from the rest of the processors who are questioning the procedure that was used.

Agriculture PS Hamadi Boga said a fortnight ago that the requisition for the funds to clear the debt had been made with the Treasury and that they were waiting for the exchequer to release the funds.