As part of ongoing efforts to strengthen transparency and financial accountability, the Corporation has disclosed that it is currently holding non-performing loans (NPLs) amounting to KES 1.4 billion. The revelation underscores both the challenges and opportunities in agricultural lending, especially in a sector as dynamic—and vulnerable—as agriculture.

The disclosure is part of the institution’s wider audit and compliance framework aimed at improving loan recovery, protecting taxpayer resources, and reinforcing responsible borrowing practices.

📉 The Nature of Non-Performing Loans

Non-performing loans refer to credit facilities where customers have failed to meet their repayment obligations for a sustained period—usually 90 days or more. In this case, the Sh1.4 billion represents loans that are either in default or have little likelihood of being recovered under current terms.

This development is not unique to this institution alone. Across the agricultural finance landscape, several factors contribute to rising NPLs, including:

• Climate-related risks such as droughts, floods, or pests

• Market instability, price fluctuations, and post-harvest losses

• Weak borrower capacity or inadequate financial literacy

• Inadequate collateral or risk assessment at issuance

🔍 Internal Measures Underway

In response to the situation, the institution has put in place a comprehensive loan recovery and risk mitigation plan. Key measures include:

• Strengthening loan appraisal and monitoring systems

• Revising credit policies to tighten vetting and eligibility criteria

• Engaging with defaulters through structured repayment arrangements and dialogue

• Partnering with government and financial sector players to build resilience mechanisms for smallholder farmers

These efforts are anchored in the commitment to remain a sustainable and impactful agricultural lender, balancing development goals with financial responsibility.

🌿 Agricultural Lending: A Delicate Balance

The institution recognizes that agricultural financing requires a development-conscious approach. Many clients served operate in high-risk environments with minimal buffers. That’s why the approach moving forward is not simply punitive—it is also supportive and reform-driven.

Loan recovery efforts will be matched with capacity-building, financial literacy programs, and climate-smart financing solutions that reduce the likelihood of default. The institution continues to advocate for policy frameworks that support farmers during downturns while maintaining institutional sustainability.

🛤️ A Path Toward Strengthened Systems

While the figure may raise concern, its disclosure also marks a positive shift in transparency, governance, and institutional reform. Acknowledging financial risks openly is the first step toward solving them, and it reflects a growing culture of accountability.

The Corporation remains committed to its core mandate of facilitating access to affordable agricultural credit—but with greater vigilance, deeper stakeholder engagement, and a stronger emphasis on recovery, risk management, and sustainability.