Tana River suspends loan programme after 80pc default

Tana River County Governor Dhadho Godhana

Tana River County Governor Dhadho Godhana during a past press briefing.

Photo credit: Stephen Odour I Nation

Tana River Governor Dhadho Godhana has suspended a revolving fund set up by the county government in 2022 to support the expansion of Small and Medium Enterprises, citing huge defaults by borrowers.

According to the governor, the beneficiaries of the Inuka Fund have failed to remit the money as required, so there is no need to keep it running lest the administration gets into legal trouble.

"It is unfortunate that we have to stop this programme lest we end up in jail. This is government money and it should return to the government," he said.

Residents in groups were invited to apply through ward committees led by ward administrators, while a few were allowed to apply individually based on their assessed ability to pay.

The county government said that of the Sh75 million disbursed, borrowers had only repaid Sh15 million.

"There are people who have not even bothered to pay the loan and that is a cause for concern. Nevertheless, the money must be paid," he said.

The governor warned that the administration would use all possible means to recover the money, including involving the Directorate of Criminal Investigations.

He reiterated that he would not wait until he and officials of his administration were in handcuffs in jail, and called on those who took the loan to comply with the guidelines.

"That money must be returned and we will make sure that we get it back before we think of the programme again, if that means arresting defaulters and prosecuting them, we will do that," he said.

However, some of the beneficiaries have appealed to the governor to grant them a waiver because of the challenges and losses they faced during the floods.

According to the beneficiaries, the desire to repay was disrupted by the calamity, hence the need to sit down with the administration and renegotiate the terms of the loan.

"We understand that there was a timeframe to pay back the loan, but some had their businesses washed away, some had their livestock killed and some had their crops washed away at maturity. Taking all these factors into account, there should be room for renegotiation," says Athman Ali, a trader.

Mr Ali points out that arresting and jailing defaulters will not bring back the loans, but rather bring misery to their families.

Other traders said that the taxes introduced in recent times had hurt their businesses and that they had not been able to meet their expectations.

"The economy is already depressing, to earn a dollar, individuals have to work three times harder, and even those in business are finding it hard, this was not foreseen but we are already here, so if the administration can take easier measures, it will be helpful enough," said Jeniffer Haluwa.

Tana River County has a record of defaulting on loans, with records as of 2022 showing a Sh22 million default from the Higher Education Loans Board, a Sh56 million Uwezo Fund that led to the county being blacklisted, a Sh8.6 million MasterCard Foundation Fund, a Sh169 million Tana Teachers Fund and a Sh5.6 million default from the Youth Fund.