This archive report was first published on 21 October 2021.
Friday, October 22, 2021, marked a significant development in the long-standing loan dispute between KCB Group and the National Cereals and Produce Board (NCPB). The bank agreed to waive Sh430 million in interest penalties slapped on the NCPB for defaulting on a Sh3.6 billion loan.
According to the National Assembly's Agriculture Committee, KCB also committed to temporarily freeze interest chargeable on the loan with effect from July 1, 2021. This concession is part of the bank's efforts to resolve the outstanding debt.
The NCPB used its assets as collateral to secure the Sh3.6 billion loan in June 2017 to finance part of the fertiliser subsidy. However, the board failed to repay the loan, leading to the accumulation of penalties.
Speaking before the National Assembly's Agriculture Committee, NCPB managing director Joseph Kimote revealed that the bank had agreed to grant several concessions, including the waiver of Sh400 million in penalties and Sh30 million in negotiations fees. The bank also agreed to utilise Sh2.65 billion in the NCPB fertiliser accounts to partially offset the loan.
The total loan exposure is now Sh3,671,710,234, as communicated to the Ministry of Agriculture and the National Treasury. The board is awaiting a directive on the payment terms and approval.
The NCPB used the cash to buy fertiliser that was sold to farmers under a subsidy programme. However, the government failed to pay the subsidy difference, leaving the debt to accumulate.
The board has other pending bills on the fertiliser subsidy programme, including Sh1.52 billion owed to ETG, Sh1.68 billion being NCPB reimbursable amount, and Sh800 million due from the State Department for Devolution.
Mr. Kimote, accompanied by NCPB chairman Mutea Iringo, revealed that the board is currently owed Sh12.7 billion by government agencies, due to years of grain handling services.
