Nairobi, Kenya – August 22, 2024: Members of Parliament have directed the New Kenya Co-operative Creameries (KCC) to consider halting its supply of milk to State House and other government agencies that have failed to settle their debts. The move comes after the cooperative expressed concerns about unpaid debts that are hampering its operations, including payments to dairy farmers.
During a session with the National Assembly’s Committee on Trade, Cooperatives Principal Secretary Patrick Kilemi revealed that various government entities, including the office of President William Ruto, have accumulated significant debts to the cooperative. The PS warned that these outstanding payments are threatening the financial stability of New KCC, a critical player in Kenya's dairy industry.
Government Agencies Among Top Debtors
The Ministry of Defence and the Administration Police Service were identified as the largest debtors, owing New KCC Ksh49.49 million and Ksh32.38 million, respectively. State House itself owes Ksh14.62 million, while the presidency has an additional Ksh6.79 million in unpaid bills.
Other notable debts include Ksh10.53 million owed by Kenyatta National Hospital, Ksh4.45 million from the Kenyatta National Hospital Private Wing, and Ksh4.04 million from Moi Teaching and Referral Hospital. Additionally, the National Security Intelligence Service, the Office of the First Lady, and the Nairobi Water and Sewerage Company are also in arrears, with debts of Ksh4 million, Ksh3.07 million, and Ksh2.27 million, respectively.
MPs Demand Action
The Trade Committee, led by Embakasi North MP James Gakuya, was firm in its stance that New KCC should not allow its operations to be compromised by unpaid debts from government agencies. “New KCC is in business, and no one compels you to keep supplying milk to government agencies that still owe you money,” Gakuya told PS Kilemi during the session.
He emphasized that the cooperative must prioritize its financial health and ensure that dairy farmers, who depend on timely payments, are not adversely affected. “You cannot tell farmers that you can't pay them because government bodies owe you,” Gakuya added, highlighting the ripple effect these unpaid debts have on the wider agricultural sector.
Impact on Farmers
PS Kilemi further explained that the delays in payment from these government entities are directly impacting New KCC's ability to fulfill its obligations to dairy and coffee farmers. The cooperative, which plays a crucial role in supporting Kenya’s agricultural economy, is now facing financial difficulties due to the prolonged debts.
“New KCC is failing to meet its obligations because of supporting government agencies. We need the help of this committee for the outstanding debt to be paid,” Kilemi appealed to the Committee.
The situation has sparked a broader discussion on the financial management of government agencies and their impact on critical industries like dairy farming. As New KCC struggles to manage its operations under the weight of these unpaid debts, the pressure is mounting on the government to address these financial lapses.
The Road Ahead
The directive from Parliament marks a significant step in holding government agencies accountable for their financial obligations. As New KCC considers its next steps, the potential halt of milk supplies to State House and other agencies could serve as a wake-up call for prompt payment and financial responsibility across government bodies.
