Amica Sacco in Murang'a county has said it will extend the loans repayment period for farmers who will be unable to pay their debts in time.
This was after growers received reduced annual tea bonuses.
Chief executive officer James Mbui said on Friday that farmers owe the sacco more than Sh500 million in loans and were to pay a third of the money after receiving the bonus.
But last week on Thursday, KTDA released Sh20 billion to pay farmers their tea bonus, a reduction from the Sh27 billion it paid last year to the 69 affiliated tea factories countrywide.
The 10 tea factories in Murang’a county have paid their farmers between Sh17 and Sh30 per kilo of tea sold. The farmers are unhappy with the reduced amount of bonus they have received.
Mbui urged the affected farmers to visit the nearest sacco branch to discuss an extension of their loan repayment time.
The CEO, however, said it will recover what it can from the bonus, while the rest will be repaid over time.
Mbui expressed confidence that the reforms being implemented by the government in the tea sector will result in increased payments next year.
“Our Sacco will continue to support farmers as they experience these financial challenges because we know they have many other responsibilities,” he said.
Mbui spoke during the opening of a renovated Sacco branch in Kangari town.
Amica Sacco derives most of its members from the tea, coffee and dairy sectors.
The coffee sector, the CEO said, is however doing better with increased payments and urged farmers to boost their production to earn more.
He said some coffee societies have paid more than Sh100 per kilo this year.
Mbui also supported an amendment to the Sacco Societies Act that will require all Saccos to establish a Deposit Guaranteed Fund.
The fund, he said, will provide a remedy to situations where members of the public lose their savings when Saccos go under.
The fund will however affect Saccos’ capability to offer loans as their liquidity will be reduced.
“Saccos will no longer be able to offer a vast range of credit facilities as they have before, but the fund is necessary to safeguard members’ deposits,” he said.
In August this year, the Sacco Societies Regulatory Authority (SASRA) amended the Sacco Societies Act (2008) providing for the establishment of the fund to protect members’ deposits of up to Sh100,000 in the event a Sacco collapses.
Edited by A.N
