A micro financial institution in Murang’a is in process of rescheduling loan repayment by tea farmers following reduced bonus.
Chief Executive Officer of AMICA Sacco Mr. James Mbui has requested farmers who want their loans to be rescheduled to visit their offices for assistance.
During the Sacco’s AGM held in Murang’a Thursday, Mbui noted that majority of their members are tea and coffee growers and 2019’s returns have been minimal occasioning the farmers to face challenges in repayment of their loans.
The move to reschedule loan payments will certainly affect cash flow in the society, but were are just being empathetic to our customers who have supported the Sacco for many years, he added.
“The reasons behind reduced tea bonus are beyond farmers and thus we cannot punish our customers due to reduced bonus rates,” said the CEO.
In 2019, KTDA announced reduced rates of tea bonus prompting uproar among farmers who depend on the bonus to repay their accrued credit facilities.
Majority of tea factories within Murang’a County in 2019 will be paid bonuses ranging from Sh20 to Sh30, an amount which is 40 percent less from what they were paid 2018.
Mbui also expressed concerns of reduction of coffee earning in the county from Sh1.5 billion in 2018 to Sh500 million in 2019.
He said fluctuation of prices of the cash crops has affected the financial institutions, which depend on farmers returns to operate.
“We give credit facilities to farmers to improve their production but with reduced returns, our customers have been put to a situation where they are facing uphill to repay their loans,” noted the CEO.
He stated that in 2020, AMICA will embark on supporting small and medium enterprises targeting to earn more profits form the issued credit facilities.
Meanwhile, Mbui has asked the Central Bank of Kenya to consider extending time to return old 1000 bank notes for the financial service institutions.
The CEO observed that the September 30 deadline given by CBK applied to every citizen, adding that some individuals may opt to return the old notes on the last day and to various financial institutions, which may in turn face challenge to channel the money to Central Bank.
“I am appealing to CBK to extend by one-week, time for us financial as financial institutions to return the old Sh1000 notes to them, as we may face a challenge when our customers opt to return their money on the last day,” stated Mbui.
However, he said as a Sacco they have notified their customers to make sure that they have returned their old Sh1000 notes before the deadline, but still there was fear that some individuals may opt to return them on the last day.
By Bernard Munyao