This archive report was first published on 10 July 2019.
July 10, 2019 - A Kenyan farmers' co-operative society is facing a court battle with a US investment company over a Sh36.6 million loan that has accumulated interest.
Root Capital Incorporated, a Massachusetts-based investment company, obtained a court order to compel Tekangu Coffee Farmers' Co-operative Society to settle the initial loan amount of Sh24 million and accrued interest of Sh12 million.
The loan was granted in April 2013 for the construction of a coffee factory in Mathira Constituency, but the society has failed to repay it, leading to the accumulation of interest.
According to court papers, Root Capital claims that the society was supposed to use the loan to acquire machinery and equipment required in coffee processing and was to be repaid at an interest of 11 percent annually on simple reducing balance.
However, Tekangu Coffee Farmers' Co-operative Society has denied the allegations, arguing that its former managers obtained the loan illegally and that Root Capital failed to follow the Public Procurement and Disposal Act before giving out the loan.
Through its lawyer, Wahome Gikonyo, the society claims that the loan was a deliberate ploy to fleece innocent, poor coffee farmers and that farmers have to authorize it in an annual general meeting.
The case resumed on Monday after a nine-month break, with the next mentioning set for September 30th, 2019.
