Government now considers financial bailout for Kenya Planters' Co-operative Union

KPCU wakulima house

NAIROBI, KENYA: The Government is considering a financial bailout for the Kenya Planters' Co-operative Union (KPCU), now under receivership.

A source in the Ministry of Industrialisation and Enterprise Development yesterday confirmed that the State has renewed interest in the once vibrant farmers' organisation, adding that financial bailout is one of the measures being considered.

Top on the agenda is how much money the Government is willing to inject into the institution. "Government has lined up a number of strategies to revive KPCU, among other dormant cooperative societies. One strategy you cannot rule out is injecting substantial money to bail out the institution," the source said.

ELECTION DATE

Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed confirmed that the roadmap to revitalise KPCU will start at the end of this month. This was during the celebrations to mark the International Cooperative Day dubbed (Ushirika Day) at KICC, Nairobi.

CS Mohammed said this is when farmers will elect new directors. "I have directed the Commissioner of Cooperatives to preside over elections of new directors on July 31, this year," said Mohamed. "The elections should be held in all the coffee growing areas and the current directors of KPCU are eligible."

Commissioner of Cooperatives Patrick Musyimi in an interview explained that Government role is to ensure the society is back on track to carry out its role along the coffee value chain. "We have been working with the board and agreed of the new development," stated Musyimi.

KPCU was placed under receivership by KCB in October 2009. Deloitte Consulting Ltd was appointed receiver managers over its failure to repay a Sh644 million debt. Its assets were almost auctioned a year later, but the government intervened.

Government in July 2012 facilitated for election of a caretaker board chaired David Gatei but the board complains of lack of support from government. The board had appealed a for a capital injection of Sh1.2 billion from the State but the latter declined, citing lack of sound governance.

MILLER's RECAPITALISATION

In July last year, farmers approved a new business model requiring them to participate in a programme to recapitalise the giant miller. One component of the programmes was to pay Sh680 million to KCB - an amount agreed with the latter after the waiver of interest accrued from a debt of Sh644 million that led the bank to place it under receivership.

The bank had agreed to lift the receivership and allow the farmers to pay the debt. The interim board had agreed with the bank to pay the stated amount in all instalment with an initial deposit of sh100 million.

However, the deal flopped after KPCU failed to obtain title deeds to the properties against which the debt was charged. "We have not heard from the minister since he was appointed. We are not aware of the announced elections," said David Gatei the interim board chairman in a phone interview.

The Cooperative Alliance of Kenya, the umbrella body of all cooperatives in the country supported the Government move, saying it will boost the coffee value chain.