State puts aside Sh12bn to clear 2017 maize subsidy debt

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The Treasury has put aside 12.7 billion in the supplementary which will be used to pay maize suppliers under the 2017 subsidy. The amount also includes the penalties resulting from the State’s failure to honor the agreement which led to a breach of contract.

The money consists of the principal amount and accumulated interest on unsettled bills to millers.

“The current expenditure reflects an increase of Sh11.7 billion consisting of additional Sh12.7 billion for settlement of pending bills under the Maize Subsidy Programme and outstanding legal claim for breach of contract, and a reduction of Sh1 billion on account of rationalization of budget and excess provision for salaries,” reads the supplementary budget on the allocation for the State Department for Crop Development and Agricultural Research.

The Ministry of Agriculture had agreed with nine millers to import and trade maize to the State under the subsidy programme to reduce the cost of flour that was at Sh150 for a two-kilo packet.

By the end of 2017, the payments were to be finalized.

However, millers moved to court in 2019 since as at the end of 2017, the government owed Sh2.3 billion which, which, according to the millers had inflated to Sh5 billion.

So far, the government has paid only Sh3 billion to five millers. This led to an outburst from the other millers due to the lack of clarity on the procedure that was used.

The Agriculture PS Hamadi Boga noted that the funds’ requisition to clear the debt was made with the Treasury and are looking forward to the release of the funds by the exchequer.


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Anthony Kiratu is the Founder of Finsolutions. He is a financial analyst with over 5 years experience in research, investment advisory, valuation and financial modelling. Anthony is a member of the Institute of Certified Investment and Financial Analysts and Institute of Certified Public Accountants of Kenya. He is passionate about development of African Capital Markets through training of investors and dissemination of information for sound financial and investment decision making process. He is also a part-time lecturer in the Certified Investment and Financial Analyst course in the subjects of International Finance, Portfolio Management, Equity Investment Analysis, and Fixed Income Securities. Email: Contact: +254 780216631

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