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Kenya: Govt Delays Sh2.5 Billion Pending Bills for Millers With Sh269 Million Accrued Interest

Nairobi — Taxpayers are poised to cough Sh269 million to pay the Cereal Millers Association (CMA) as part of increasing accrued interest in the maize subsidy programme.

The government has failed to pay the millers a Sh2.5 billion balance for supplying maize flour at a subsidized price due to the maize shortage that led prices of Unga to skyrocket.

In the revelations made before the National Assembly Agricultural Committee, CMA was contracted to supply maize flour worth Sh4.4 billion but the government only paid them Sh1.7 billion with the status of the balance payment in limbo.

“The outstanding Sh2.5 billion has not been paid and continues to accrue interest which will be forwarded to the taxpayers and continues to increase until its paid,” said Paloma Fernandez, CMA CEO.

In the contractual agreement, the Ministry of Agriculture led by former Agriculture CS Peter Munya signed a contract with 129 millers to supply subsidized maize flour from June 19 last year to August 20.

The maize subsidy programme contract also underlined that any delayed payment will attract interest until it is paid.

Of the 129 millers who were part of the Sh6.6 billion subsidy program, 29 of them were from the CMA.

In a letter seen by Capital FM, the millers have severally written to Treasury Cabinet Secretary Njuguna Ndung’u to remind him to honor the subsidy contract with millers decrying that the delays in payments have negatively affected their business.

“With this letter, we humbly request a meeting with your office in the coming week to further discuss the settlement of the outstanding bill,” the millers stated.

“We are afraid that further delay of the payment will continue to adversely impact on the operations and running of the flour milling business and might also affect maize importation,” the letter read in part.

The desperate calls by the millers for the government to sort out the outstanding bills comes amidst revelations by the government that the public coffers are dry and the economy has been crippled.

Further, the President William Ruto administration has been against the subsidy programme saying it was a conduit to siphon public funds.

Nominated MP Sabina Chege raised eyebrows on the delayed payment that has continued to attract interest at the expense of the taxpayer saying forces within the government were working to ensure the payments accrue interest for personal reasons.

“You have been paid Sh 1.9billion with a balance of Sh 2.5billion which you say is the principal amount without interest. The agreement with the government was that if the money was to be delayed you would have been paid interest,” she stated.

“Why do we have these delays each and every time, it seems like someone is doing this intentionally to benefit.”

Nyando MP Jared Okello requested the millers to forgo the accruing interest expressing that the government is currently broke due to the cash flow constraints.

“We all understand the situation that the government is going through unless you are a visitor in Jerusalem. Could you be magnanimous and patriotic to only pursue the principal amount of Sh2.5 million in the interest of the economy of Kenya,” said Okello.

CMA however argued that they risk being auctioned as the government continues to delay with their payments with no hope in sight.

“As we talk the bank will not say since the government is having the money with it we will stop charging interest. The bank charges us interest of the whole loan with penalties and before you know it you are being auctioned,” said CMA legal counsel.

In mid-2022, former President Uhuru Kenyatta’s administration introduced a subsidy programme to cushion Kenyans from high prices of maize flour.

It came after the price of a 2-kilo bag of flour increased to Sh230 from Sh100 previously. Millers were to sell maize flour at a subsidy rate of Sh100.

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