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May 08, 2008

Kenya may write off farmer loans in wake of political violence

The billions of shillings Kenyan farmers owe two financial institutions could be forgiven, if the Government implements a motion passed on May 7.

MPs explained that the violence that followed the contested December presidential elections and severe drought had affected crop output and plunged the sector into a limbo. For that, they said, most farmers could not service loans from the Agricultural Finance Corporation (AFC) and Agricultural Development Corporation (ADC).

The members supported a motion seeking to have the loans written off to enable them develop their farms and increase output. Agriculture assistant minister Gideon Ndambuki supported the motion, but said it was unlikely to be implemented during the 2008/2009 financial year because the estimates had been prepared.

“I will take it (the motion) to the ministry, but we must look at our budget. We will do what is necessary in the next fiscal year, but I cannot stand here and make pledges over something we are not going to do immediately,” the minister said.

Describing the motion as “crucial”, Mr Ndambuki said his ministry was restructuring AFC to make it more efficient. Plans were under way, the House heard, to allow more banks to give credit to horticultural farmers.

Initiating debate on the motion, Mr Wamalwa said the post-election violence affected farmers, particularly in Rift Valley Province, thereby threatening national food security. There was also need to enhance production in view of impending global food crisis, he said.

Those who supported the motion accused the Government of neglecting farmers, yet agriculture was the backbone of the economy. High prices of inputs and middlemen conspired to send farmers to abject poverty.

Past parliaments were accused of resorting to quick fix-it solutions such as debt forgiveness instead of providing long-term answers to perennial problems facing the sector.

Initiating debate, Mr Wamalwa asked Kenya to be alert to food riots that have happened in other countries in Africa such as Senegal, Egypt, and Mogadishu. He reminded MPs of the initiatives put in place by the government of Senegal to enhance food production and realise a green revolution.

Mr Wamalwa asked the Government to provide farmers with more extension officers and pump more funds into kitties of ADC and AFC for ease of access to loans. But Medical Services assistant minister Danson Mungatana did not agree with Mr Wamalwa. In his view, ADC and AFC were financial institutions, and it was not fair for Parliament to ask them to write off loans.

Mr Mungatana proposed that the two institutions be compelled to embrace “disaster assistance” to farmers, instead.

The minister was supported by Kisumu Town East MP Shakeel Shabbir (ODM), who said it would be unfair to grant all farmers a blanket debt forgiveness since some of the large-scale growers were able to service the loans. He proposed a moratorium based on merit.

Seconding the motion, Mosop member David Koech (ODM) said the high cost of inputs had forced many farmers out of the sector.

Gwassi member John Mbadi (ODM) proposed an amendment to the motion to include in the debt forgiveness farmers who had suffered losses because of drought. The move was supported by Prof Philip Kaloki (Kibwezi, ODM-K) and Higher Education, Science and Technology assistant minister Kilemi Mwiria

The Daily Nation

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