President William Ruto has announced cheap loans for coffee farmers to boost the production of the cash crop.
Speaking in Meru on Thursday, June 13, Ruto said the government will provide affordable loans as an alternative for farmers in need of financial assistance.
He added that the government will offer loans at an interest rate of 3%, compared to the much higher rates of 24%, 25%, and 26% offered by private microfinance institutions and banks.
“The government has earmarked Ksh6.7 billion for the coffee sector. While others are offering loans at interest rates of 24%, 25%, and 26%, we will provide loans at a 3% interest rate,” he said.
The President urged coffee farmers to consider the government loan offer to ease the burden of high-interest debts hindering the sector.
“Will you go for 26% or the government’s 3%? Even if you are not good at mathematics, between 26 and 3, which is lower? If you want to borrow money, we have set aside Ksh6.7 billion. You can take it and return it at a 3% rate,” Ruto said.
Ruto-No Loans Without Farmers Approval
Additionally, Ruto said boards and representatives of coffee farmers will not be allowed to borrow without the approval of the farmers.
He emphasized that all loans must be approved by the farmers to ensure transparency.
“People will not take loans without the approval of the farmers. Going forward, any debt will not be borrowed by the management or board until it is approved at the general meeting,” Ruto said.
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Writing Off Loans
He also mentioned that the government has written off Ksh6 billion in debts owed by coffee farmers, marking the third time the Treasury has bailed out the sector.
Furthermore, Ruto stated that farmers, cooperatives, and licensed individuals will be allowed to participate in the Nairobi Coffee Exchange.
He explained that the move will enable farmers to sell their coffee based on prevailing market prices.
Also Read: Ruto Gives MPs Orders on Finance Bill 2024
Cheap Fertilizers, KPCU & AFC
Ruto pledged to lower the prices of fertilizer for coffee farmers to Ksh2,500 and to allocate Ksh15 billion to the Agricultural Finance Corporation.
“I want Meru dairy to talk to the board of AFC so that when you want to borrow money, you don’t go to the bank charging 26%. Go to AFC so that they can charge you 9%,” he said.
He also announced that Ksh600 million will be designated for the modernization of the Kenya Planters Co-operative Union (KPCU) to enhance processing.
Additionally, Ksh600 million will be set aside for pulping, and another Ksh600 million for seedlings.
Ruto also allocated an additional KSh2 billion to the dairy sector to boost dairy cooperatives, ensuring they pay better prices and promptly, and enhance farmers’ access to credit.
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