A 2016 deal between the Agriculture ministry and the National Cereals and Produce Board (NCPB) that involved acquiring and selling subsidised fertiliser has plunged the board into a Sh7 billion debt.
Managing director Joseph Kimote on Thursday said the hole has caused fear in lenders even as the debt NCPB owes KCB continues to grow.
In the fertiliser subsidy deal , the Ministry of Agriculture mandated NCPB to buy fertiliser and thereafter sell it to farmers at lower rates with the Treasury settling the deficit.
Speaking in Nairobi yesterday, Mr Kimote explained NCPB’s predicament arising from the 2016/17 agreement.
More than 3,000 bags of NCPB fertiliser found being illegally repackaged
“When the loan facility we took to finance the programme matured, we did not have money to service it,” he said. Because of non-repayment, he added, “the interest rate was increased and penalties slapped on the facility. The loan is now growing at roughly Sh110 million per month.”
The parastatal borrowed billions of shillings from KCB to purchase the fertiliser through Export Trading Company on a two-year framework.
Mr Kimote noted that NCPB has not been receiving funds from the government to repay the debt. He faulted the Treasury for not releasing the money it is owed, which is meant for the fertiliser subsidy programme.
Meanwhile, Mr Kimote said NCPB has collected 200,000 bags of maize from farmers across the country for the last harvest season against a target of a million.
North Rift farmers accuse NCPB of selling substandard fertiliser
“We’ve opened our stores [to receive maize] and we’re seeing a lot of trucks lining up at our silos... We’re optimistic that we will be able to achieve our target of buying one million bags of maize in the next two-to-three weeks,” he said.
However, in a revelation that will worry Kenyans, board chairman Mutea Iringo said NCPB holds no stock of strategic food reserves, which are critical in ensuring steady supply of maize and other cereals.
A loader carries a bag of fertiliser at the National Cereal
Photo credit: File | Nation Media Group
Lack of food reserves will see the price of staple food, such as maize flour and bread, shoot up due to shortage.
“The full operationalisation of the divisions (the trading division and National Food Reserve) has been limited by funding challenges,” Mr Iringo said.
