Kenyan farmers advised against borrowing

The Chairperson, Privatisation Steering Committee, Patricia Adala (left), and CEO of the Privatisation Commission Solomon Kitungu during a recent stakeholders’ engagement meeting held at Chemelil Sugar Company. They want farmers to stop taking loans. [PHOTO: HEZRON OCHIEL/STANDARD]

KENYA: The Privatisation Commission has cautioned sugarcane farmers against borrowing money from financial institutions to buy stakes in the sugar companies.

The commission argued that borrowing will burden farmers with huge loans and subsequent interest, thus affecting their welfare, and asked them to seek alternative ways of raising funds.

In an effort to raise the 24 per cent share stake, the farmers have been exploring various mechanisms including, borrowing from banks and Savings and Credit Co-operative Organisations (Saccos).

Speaking to The Standard the Chairperson, Privatisation Steering Committee, Patricia Adala, said the Government wants to ensure that money is in the hands of farmers and borrowing from financial institutions will not be the best option.

"We encourage farmers to mobilise themselves into a forceful voice through Saccos to raise funds and put in place laws that will assist in enhancing cane production," she said.

REPAY DEBT

The CEO of the Privatisation Commission Solomon Kitungu told The Standard that farmers are unlikely to be able to pay for their shares at the time of sale and that the law prohibits sale of shares on credit.

He noted that borrowing from financial institutions would depend on the farmers' ability to repay the debt until the companies they bought into were able to pay dividends or until they were able to sell their shares within the Trust.