A report by the Auditor-General Nancy Gathungu has exposed how 128 Busia County government employees posed as farmers to benefit from “free” agricultural loans as the devolved unit now risks losing Sh50.7 million in non-performing loans.
This emerged as Governor Paul Otuoma was at pains to explain to senators why the millions advanced to the county staff from the Busia County Agricultural Development Fund have not been recovered, three years since he assumed office.
The report also revealed how the county executive and the county assembly colluded to enact a defective law to cover their and the beneficiaries’ tracks.
Busia Governor Paul Otuoma appears before the Senate County Public Investments Committee (CPIC), chaired by Vihiga Senator Godfrey Osotsi, at Bunge Towers in Nairobi on September 15, 2025.
Photo credit: Dennis Onsongo | Nation
The revelations emerged during a charged Senate County Public Investments and Special Funds Committee on Monday where the senators demanded action be taken culpable county officers.
According to the report of Busia County Agricultural Development Fund for the financial year ended June 30, 2024, small-scale farmers were given Sh53.7 million in loans between 2016 and 2024 without security or collateral.
The period in question covered the tenure of former governor Sospeter Ojaamong and his successor Dr Otuoma.
Senators heard that among the small-scale farmers were county employees, and at first only 63 of the staffers admitted to being advanced the loans. An audit of the beneficiaries revealed that a total of 128 staff received the loans. The employees received Sh4.8 million in loan.
The committee heard that the law used to operationalise the fund – the Busia County Agricultural Development Fund Act, 2014 – was watered down to remove the provision of security as well as how to enforce recovery.
The fund was intended to be a revolving one, but its future is now uncertain as it is doubtful that the money will be recovered.
Governor Otuoma was taken to task by the committee to explain why his administration has not tried to recover the loans since he assumed office in 2022.
The first-term governor admitted that 2,000 farmers received loans without collateral and that the county staff who were given loans exploited a weakness in the regulations governing the operation of the fund.
“The money was meant for small-scale farmers who could not get commercial loans. Initially we thought only farmers benefited from the loans but after an audit, we found out that some of the beneficiaries are county government staff and they were more than had been reported before,” said Governor Otuoma.
“We inherited a defective law in terms of recoverability of the loans, but we are doing our level best to recover the loans. We have proposed an amendment to the law to tighten it.”
Busia Chief Officer for Trade, Investment, Industrialization, Cooperatives, and SMEs Elijah Chessa Mwaro, Governor Paul Otuoma and County Secretary John Oscar Juma appear before the Senate County Public Investments Committee (CPIC) at Bunge Tower, Nairobi, on September 15, 2025.
Photo credit: Dennis Onsongo | Nation
“It appears I should be in Busia County where I can get money for free and the county government will not try to recover the same from me,” he said.
Machakos Senator Agnes Kavindu questioned why Governor Otuoma’s administration only wrote to the defaulters in March this year despite the county boss having been in office since 2022.
Nominated Senator Hamida Kibwana said, “What took your administration so long to start recovering the loans? Punitive measures must be put in place to ensure the money is recovered because just pursuing the defaulters will not result in any success.”
Governor Otuoma said they have not failed in recovering the money. He, however, admitted that some of the county officers who presided over the “shady scheme” are still in office.
Busia Senator Okiya Omtatah asked the governor to explain what action has been taken against county officials who advanced the loans, knowing too well the loans were being given without security or proper documentation.
He said Article 226(5) of the Constitution states that if a holder of a public office, including a political office, directs or approves the use of public funds contrary to the law or instructions, the person is liable for any loss arising from that use and shall make good the loss, whether the person remains the holder of the office or not.
“Crack the whip so that the officers can be held responsible for their actions. The governor should go ahead and pursue the officials and the beneficiaries,” he said.
Members of the Senate County Public Investments Committee (CPIC), chaired by Vihiga Senator Godfrey Osotsi, during a session at Bunge Tower, Nairobi, on September 15, 2025.
Photo credit: Dennis Onsongo | Nation
Committee Chairperson Godfrey Osotsi asked the governor to recover loans taken by his staff by deducting the money directly from their salary.
“We need to know the officials who presided over the shady scheme and we also insist that the money must be recovered because Sh53.7 million is not pocket change,” he said.
At the same time, it emerged that a similar pattern was witnessed in the operation of Busia Cooperatives Enterprise Development Fund where 92 co-operatives received Sh106 million in unsecured loans between 2014 and 2019.
The audit report revealed that only Sh39.4 million had been paid back as at June 23, 2023 and Sh2.8 million recovered from defaulters.
“This is almost similar to what happened in the other Fund. However, we have asked the County Attorney to initiate legal proceedings against the cooperatives,” said Governor Otuoma.
Nominated Senator George Mbugua threw asked whether the money reached the cooperatives and not pockets of rogue officials.
Senator Omtatah added: “This is money that we cannot let disappear given the level of poverty in Busia County. We must summon top officials of the other regime to also come and explain what happened. We shall create a bad precedent if we don’t do that.”
