Spotlight on Crops fund over Sh15bn debt write-off plan
A State fund is on the spot for seeking to scrap nearly Sh15 billion owed by players in the sugar and coffee sub-sectors despite options to recover the taxpayers’ money.
The funds were meant for farm input, crop establishment, processing, and buying machinery meant to step up the output of coffee and sugar.
The Commodities Fund (ComFund) in its financial report for the 2020/21 fiscal year has a provision for Sh14.73 billion in non-performing loans out of the Sh16.1 billion dished out over the years — a staggering 91 per cent bad debt provision which puts to question its commitment to recovering the amount.
Ironically, ComFund disbursed another Sh321.6 million to the sugar and coffee sub-sectors in the financial year ended June 2021 despite the unpaid billions, drawing the attention of Auditor-General Nancy Gathungu, who now queries the action.
“The management has not given the basis for the huge provision of loans. Further, the fund disbursed approximately Sh321.16 million for sugar and coffee portfolios during the year under review despite the high percentage of portfolio risks,” she says in a comment on ComFund’s latest financial report.
“Consequently, the validity, accuracy, and full recoverability of the long-term receivables from exchange transactions — loans and advances totalling Sh754,905,000 could not be confirmed,” the auditor said.
In its 2020/21 financial report, ComFund said it recovered loans amounting to Sh844.49 million comprising Sh452.18 million and Sh392.31 million for the sugar and coffee sub-sectors respectively, raising queries on why it would be quick to provide for bad loans when there is a chance to recover the loan.
The sugar sector holds 93 per cent of ComFund loan portfolio.
The fund cited collection of non-performing historical loans, mostly with the sugar sector and unsecured by tangible securities. It “had sought to write off the non-performing loans from the National Treasury through our parent ministry.”
“All government-owned sugar millers, which hold a majority of commodities fund loans operate below-installed capacity while others are not operational. The industry as a whole is also faced with funding challenges following the abolition of the sugar levy,” ComFund said. BY DAILY NATION
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