Economy

Fund accused of stopping State sugar firms loans

cane

State millers have since resorted to seeking grants from the Ministry of Agriculture in order to pay farmers’ arrears that stand at Sh2.4 billion. FILE PHOTO | NMG

The State-owned agricultural financier is on the spot for abandoning government sugar millers to focus on private ones, worsening the plight of cane farmers.

The Commodity Fund, however, told Parliament it stopped giving credit to "non-performing companies", most of which are State-owned, to protect government funds.

As at June 2016, the agency’s loans and advances balances stood at Sh8.4 billion, which includes non-performing loans of Sh5.6 billion.

“The State agency seems to be abandoning government millers and focusing more on the private ones hurting our farmers,” said Shinyalu MP Justus Mugali when the officials appeared before the National Assembly's Special Funds Accounts Committee.

Commodity Fund managing trustee Nancy Cheruiyot told MPs the loans posing recovery challenges are the historical ones, which had compelled the Fund to demand bank guarantees for approval.

However, the committee observed that such stringent rules were discouraging public millers from seeking credit.

State millers have since resorted to seeking grants from the Ministry of Agriculture in order to pay farmers’ arrears that stand at Sh2.4 billion.

Companies under receivership have been unable to repay outstanding loan balances, said Ms Cheruiyot.

Muhoroni Sugar Company which is in receivership owes the Fund Sh219 million.

A loan repayment agreement signed in February 2017 with Muhoroni to pay at least Sh2 million monthly was abandoned midway.

Sugar Directorate chief Solomon Odera said loan recoveries by the Fund lies in the challenge of a government institution selling the assets of another government firm.