The government has announced a waiver of all outstanding interest and penalties on loans issued under the Land Settlement Fund, bringing relief to settlers living in government settlement schemes across the country.
The waiver applies to land and development loans issued under the Land Settlement Fund, which is administered by the Land Settlement Fund Board of Trustees.
The Fund supports settlement schemes that are implemented by the National Government in consultation with the National Land Commission and county governments.
According to a gazette notice dated March 27, the Cabinet approved the move, which applies to settlers and individual plot owners who still owe money under the Fund. Under the decision, borrowers will only be required to pay back the original loan amount, with all interest and penalty charges cancelled.
Terms of the Land Settlement Fund Loan Waiver
Lands Cabinet Secretary Alice Wahome formally announced the waiver and outlined its implementation, stating:
“It is further notified that the Cabinet has approved a waiver of all outstanding interest and penalties on land and development loans issued under the Land Settlement Fund,” the notice states.
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The gazette states that all interest and penalty charges on loans issued under the Fund have been cancelled. This means settlers will no longer be required to pay extra charges that had built up on their loans over time.
According to the CS, borrowers have more time to clear what they still owe. Under the notice, settlers have been granted a 12-month grace period, during which they will only be required to repay the remaining principal.
“Accordingly, all outstanding interest and penalties on loans issued under the Land Settlement Fund are waived; a moratorium period of 12 months, commencing on 13th February 2026, is granted to all settlers and individual plot owners to pay the outstanding principal loan amount only,” the gazette reads.
Moratorium Period and Repayment Conditions
The gazette requires beneficiaries to use this period to clear their principal loan amounts in full.
However, the CS issued a clear warning to beneficiaries who fail to repay within the moratorium period. The notice states that once the grace period ends, unpaid balances will resume accruing interest.
The gazette provides that “upon the expiry of the moratorium period on 14th February 2027, any unpaid principal amount shall attract interest in accordance with the applicable terms of the Land Settlement Fund loans.”
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This means that settlers who do not settle their principal balances by the deadline will revert to the original loan repayment terms.
The government has directed settlers and individual plot owners to confirm their loan balances online. According to the notice, beneficiaries can obtain their individual principal loan amounts by accessing the Ministry of Lands website at www.lands.go.ke and following the prescribed guidelines.
Settlement Schemes in Kenya
CS Wahome noted that settlement schemes are important for expanding land access, supporting agricultural production, and promoting rural development.
Currently, Kenya has 520 settlement schemes spread across 26 counties. Of these, 484 schemes are fully registered, while 36 schemes are still undergoing registration.
These schemes are administered by the National Government, in collaboration with the National Land Commission and the respective county governments.
The Land Settlement Fund Board of Trustees, established under sections 134 and 135 of the Land Act, 2012, is responsible for administering the loans issued under the Fund.
Wahome encouraged all affected settlers and plot owners to take advantage of the moratorium period to regularize their loan accounts and avoid the return of interest charges after February 2027.
