Individual sugarcane farmers eyeing credit from the Sugar Development Fund (SDF) face tougher conditions as the State moves to tame runaway loan defaults running into billions of shillings.
In new plans targeted at weeding out serial defaulters, the State plans to go big on the credit records of borrowers, including a requirement that they provide mandatory clearance by the Credit Reference Bureau (CRB) and the Kenya Revenue Authority (KRA).
“In order to access the SDF loan facility, an applicant shall: a) abide by the industry regulations, guidelines and standards; b) not have any non-performing loan(s) with the Board; c) submit a duly filled application form accompanied with a business proposal; d) submit a copy of their KRA - PIN Certificate; e) submit a valid Tax Compliance Certificate; f) submit a valid CR 12 Form; and g) submit a Credit Reference Bureau (CRB) report,” the State said.
Loan repayment under the SDF has been problematic over the years, with borrowers defaulting on an estimated Sh3.7 billion by last year.
And in strategy to beat individual ‘ghost farmers’ eyeing cash from the fund, the State demands that they present a copy of their national identification, a sketch map and GPS coordinates of the project fields and if using land as security, provide a copy of the land title document, sketch map and GPS coordinates of the land security.
The fund is administered by the Kenya Sugar Board(KSB) and seeded through the newly reintroduced Sugar Development Levy(SDL), which is collected by the Kenya Revenue Authority(KRA). The SDL is charged on both imported and locally produced sugar.
Every local miller pays four percent of the ex-factory price of the produce by the 10th day of the month immediately following the month when the sugar is manufactured.
SDL is also payable at four percent on the cost, insurance, and freight (CIF) value of each consignment of imported sugar falling under the East African Community, Common External Tariff. CIF is an international shipping agreement, which represents the charges paid by a seller to cover the costs, insurance, and freight of a buyer's order while the cargo is in transit.
KRA began collecting the re-introduced SDL on July 1, 2025, whose proceeds would be used to run the operations of the KSB, Kenya Sugar Research and Training Institute (KESRETI), price stabilisation for sugar growers, and infrastructure development in the sector.
The allocations from the SDL collections include 15 per cent for factory development and rehabilitation, 15 per cent for research and training under KESRETI, 40 per cent for cane development and productivity, 15 per cent for infrastructure development and maintenance in sugarcane-producing regions, 10 per cent for KSB administration, and 5 percent for sugarcane farmers’ organisations.
The components for infrastructure development and maintenance, KSB, KESRETI, and the sugarcane farmers organisations are applied as grants, while factory development and rehabilitation, and cane development and productivity enhancement will be disbursed as loans.
The SDL retains an equivalent of five percent of the funds collected as reserve funds. The reserves accumulated by the fund shall support the integrity of the Fund, and will act as contingency funds for unexpected occurrences in the sugar industry.
