Introduction to problems of loan repayment on settlement schemes in Kenya

In 1961 Kenya embarked on a program of agricultural reform called the Million Acre Settlement Scheme providing for the transfer of ownership of land in the Rift Valley from outgoing white settlers to local farmers. These new settlers were given loans by the Kenya Government to cover the cost of the purchase of their plots and of certain development inputs. Over course of time most of these farmers have fallen heavily into arrears with repayment of their loans and this problem provides the focus for this study of problems of farmers on the settlement schemes, which has the ultimate objective of making recommendations for improving the present poor rate of repayment. Not unexpectedly overall income was found to be the crucial factor affecting rates of repayment, however the relationship of size of income to rate of repayment is not straightforward as other factors intervene, especially patterns of expenditure, and more importantly perhaps to any solution are those which indirectly affect rates of repayment through their influence on income levels. It was furthermore discovered that some loan instalments are never credited due to poor administration and that the quality of administration permeates many other variables. This is a purely introductory paper since most data is still being analysed and few figures are adduced in support of the main arguments, which should be taken as provisional in nature. For the same reason no suggestions are made herein for action to improve the situation.