A report by Auditor General Nancy Gathungu has exposed how six directors at the Agricultural Finance Corporation (AFC) failed to pay up internal loans, advanced to them by their employer amounting to Ksh35 million.
In the report combed through by Kenyans.co.ke, it was noted that seven directors from the state corporation had initially taken loans amounting to Ksh54 million in the Financial Year that ended June 2022.
However, one director met the loan obligations leaving the six who defaulted.
As such, the Auditor General wondered why the agency had not moved with speed to make the loan recoveries despite there being securities for the said loans.
The report noted that only Ksh5,955,000 has been repaid for the credit facility extended to the directors.
"Further, the loan portfolio reflects Directors’ loans of Ksh54,927,000 which comprises seven (7) loan accounts out of which six of the loan accounts are in arrears amounting to Ksh35,829,353 and have all been referred to the debt recovery unit.
"A review of records revealed the six accounts have been graded as non-collectable even upon disposal of attached securities as per the existing credit policy. Although a provision of Ksh5,955,000 has been made on directors’ loans, this may be inadequate," read the report in part.
Further, Gathungu also expressed concern over the state of non-performing loans at the agency given some members of the agricultural body had been taking loans from it.
According to the report, Ksh9,892,054,000 was disbursed to members of the public and the board.
However, slightly over Ksh3 billion is yet to be repaid to the state corporation.
"Only loan balances amounting to Ksh830,573,976 held in 2,457 accounts with arrears amounting to Ksh829,695,138 were transferred to the debt recovery unit for specialised attention during the year under review.
"This is almost double the maximum allowable standard of 15% by the prudential guidelines of the Association of African Development Finance Institutions, which the Corporation uses as specified in Chapter 7.1 of the Credit Policy," read the report in part.
AFC is fully owned by the government and is tasked with offering loans to farmers across the country.
