Cooperative CS Simon Chelugui has released the process to be followed to have coffee debts waived as announced by the government.
During the sensitization meetings on the Coffee Cherry Advance Revolving Fund meetings held last year, farmers requested the Cabinet Secretary find a way to waive debts that were burdening the cooperatives and farmers to a point of making coffee farming not worthwhile.
The Ministry prepared a Cabinet Memo which was approved to a tune of Ksh 6.7 billion to support coffee farmers repay the owed debts. The Cab Memo included other support to coffee farmers like improvement of Coffee seedlings, repayment of old KPCU debts and support to emerging coffee growing areas with processing equipment to improve the quality of coffee marketed from such areas.
The objective of the debt waiver is to relieve coffee farmers’ burden on outstanding loans and advances given to coffee cooperative societies by financial institutions and other lenders. The waiver will be applied across all the country 33 coffee growing regions.
The government will form a multi-agency validation team to analyze the submitted claims from cooperative societies and prepare a report to the National Treasury for release of funds.
“The exercise calls for honesty and openness on the part of the cooperative leaders and their creditors while preparing the debts and avoid exaggeration. It is important to note that Cabinet approval emphasized that any falsification may lead to prosecution of those found culpable,” says Chelugui
In a meeting with the creditors to sensitize them and to bring them to speed on the exercise the CS said the validation team will be guided by the following parameters:
⦁ The loans in question must have been processed through cooperative societies and not individual walk-in members.
⦁ The loan must have been fixed and approved by members in a duly convened general meeting.
⦁ The Commissioner for Cooperative Development must have approved the borrowing.
⦁ A list of benefitting members in case of advances to members as loans or farm inputs or for cooperative society infrastructure or operating overheads.
⦁ For all loans given, there must be a proof that the farmers’ coffee was given as collateral (coffee hypothecation) for recovery from sale proceeds.
⦁ Loans will be considered outside the previous debt waiver. This means that for those cooperatives that benefitted from the previous waiver, any debt incurred during that period will not be considered.
⦁ The watershed for considering loans will be 30th September 2023. Any waiver claim after this debt must be submitted separately.
⦁ Any dishonesty/attempted fraud will lead to prosecution.
All creditors are requested to provide a detailed report of the loans and advances issued to cooperative societies to the Commissioner for Cooperative Development by Thursday 20th June 2024 with the following details:
⦁ Name of the financier;
⦁ The principal amount granted;
⦁ The purpose of the loan/advance;
⦁ Interest charged;
⦁ Amount of loan repaid; and
⦁ Outstanding balance.
