PRESS RELEASE BY CABINET SECRETARY FOR INDUSTRY, TRADE AND CO-OPERATIVES HON. PETER MUNYA ON KENYA FARMERS ASSOCIAITION LIMITED

Following a directive by His Excellency the President on the 20th July 2019 to my Ministry to intervene and takeover the operations of the Kenya Farmers Association Limited (KFA) with a view of restructuring it, I would like to update the public as follows:

Background

  1. KFA has undergone a number of changes in its legal status since inception. The organisation was registered in 1923 as a company then registered as a Co-operative in 1932. It operated under dual registration until 1984 when it was converted into a Co-operative union, Kenya Grain Growers Co-operative Union Limited (KGGCU). As KGGCU, the organisation operated under the Co-operative Societies Act, Cap. 490. In 1996, KGGCU changed its name to KFA Limited but continued operating as a Co-operative Society under the ‘Co-operative Societies Act’;
  2. At its peak, KFA played a major role of providing affordable farm inputs to cereals, coffee, dairy and pyrethrum farmers amongst others.
  3. KFA members’ register is composed of the original 10,000 members and the additional 53,000 members recruited during the KGGCU tenure. Most of the original members are probably deceased given that they might have joined KFA in 1950s and 1960s;
    Though KFA still enjoys goodwill of farmers, it has not met the intended objective. Currently it has 67 branches but only 33 stores are operational with most of them operating below capacity;
  4. KFA is highly indebted to financial institutions, former staff and suppliers. The immediate former Board through its initiatives has been able to clear a substantive amount of the debts inherited from former officials;
  5. KFA has not audited its financial statements for many years;
  6. Though there was an immediate former Board that was managing KFA, it is evident that there has been no election for several year thus rendering it illegitimate. Further, the immediate former Board had failed to account for its activities by:
    a) Failing to convene General Meetings contrary to Section 27 of the Co-operative Societies Act (Act);
    b) Failure to present audited accounts to the members contrary to Section 25 of the Act;
    c) Failing to file annual returns with the Commissioner for Co-operative Development contrary to Rule 14 of the Co-operative Societies Rules (Rule);
    d) Borrowing in contravention of Rule 34;
    e) Disposing of assets without member’s approval; and
    f) Incurring expenditure without approved budgets in contravention of Rule 12.

Way Forward
KFA still enjoys goodwill from the farmers and is still relevant to the Nation for the purpose of creating economies of scale, maintaining quality of farm inputs, organised marketing and provision of affordable credit to farmers.
Arising from the above and taking cognisant of the Presidential directive, I directed the Commissioner for Co-operative Development to invoke the relevant Sections of the Co-operative Societies Act and Rules and do the following:-

  1. Dissolve the immediate former Board of KFA and appoint a caretaker Board consisting of 9 persons
  2. The caretaker Board to be in office for a period not exceeding six months with the following mandate:
    a) To conduct the affairs of KFA in accordance with the established laws and regulations for maximum benefit for the members;
    b) Verification of the assets and liabilities of KFA;
    c) Clean up the members’ register;
    d) Review and amend the bylaws of KFA;
    e) Formulation of a business plan and revival strategy for KFA;
    f) Update KFA books of accounts and cause auditing of the financial statements;
    g) Reforming the structure and operations of KFA to align them to aspirations of farmers and Government priorities;
    h) Convening and preparation for a General Meeting to receive, consider and approve accounts and Elect a substantive Board of Directors;
    i) The caretaker Board and the Management will support the Government on restructuring of KFA as mutually agreed on 9th September 2019; and
    j) Any other auxiliary duty that will be deemed necessary for the attainment of the above functions.
    In its operations the Caretaker committee will make periodic reports to the Cabinet Secretary and the Commissioner for Co-operatives.
    Dated this 30th September, 2019 in Nairobi

PETER MUNYA, MGH
CABINET SECRETARY,
MINISTRY OF INDUSTRY, TRADE AND CO-OPERATIVES .

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