Agricultural Finance Corporation Act

Section 1. Short title Section This Act may be cited as the Agricultural Finance Corporation Act.

Section 2. Interpretation Section In this Act, unless the context otherwise requires— "this Act" includes any rules or regulations made under this Act; "agricultural industry" means any industry connected with agriculture or with the processing of agricultural produce; "agricultural produce" includes anything (whether live or dead) produced in the course of agriculture; "agriculture" means agriculture as defined in section 2 of the Agriculture and food Authority Act (Cap. 317), and also forestry and the establishment, maintenance and exploitation of fisheries in private ownership; "appraiser" means a person appointed as an appraiser under section 38 of this Act; "the Board" means the Board of Directors of the Corporation established by section 4 of this Act; "the Central Agricultural Board" means the Central Agricultural Board established by section 35 of the Agriculture Act (Cap. 318); "co-operative society" means a co-operative society registered under the Co-operative Societies Act (Cap. 490); "the Corporation" means the Agricultural Finance Corporation established by section 3 of this Act; "Director" means a person who is a member of the Board by virtue of section 4 or of an ap...

Section 3. Establishment of Corporation Section 3(1) There is hereby established a Corporation, to be known as the Agricultural Finance Corporation. Section 3(2) The functions of the Corporation shall be to assist in the development of agriculture and agricultural industries by making loans to farmers, co-operative societies, incorporated group representatives, private companies, public bodies, local authorities and other persons engaging in agriculture or agricultural industries. Section 3(3) The Corporation shall be a body corporate with perpetual succession and a common seal, and shall have power to acquire, own, possess and dispose of property, and to contract, and to sue and be sued in its own name. Section 3(4) The Corporation is not subject to the Companies Act (Cap. 486) or the Banking Act ( Cap. 488 ).

Section 4. Board of directors Section 4(1) There shall be a Board of Directors of the Corporation, which shall, subject to this Act, be responsible for determining the policy of the Corporation and for controlling its operations. Section 4(2)(a) not less than four and not more than six persons appointed by the Cabinet Secretary of whom at least two shall be appointed by reason of their knowledge of banking or financial matters; Section 4(2)(b) the Principal Secretary of the Ministry, or a person deputed by him in writing to take his place as a director of the Board; and Section 4(2)(c) the Principal Secretary of the Ministry for the time being responsible for finance, or a person deputed by him in writing to take his place as a Director of the Board. Section 4(3) A Chairperson and a deputy Chairperson shall be appointed by the Cabinet Secretary, after consultation with the Cabinet Secretary for the time being responsible for finance, from among the Directors, and the deputy Chairperson may, in the absence of the Chairperson, exercise all the powers and discharge all the duties which are conferred and imposed by this Act upon the Chairperson. Section 4(4) A director appointed under...

Section 5. Disqualification of Director Section 5(1)(a) he is insolvent or has conveyed or assigned his property for the benefit of his creditors generally or has made a composition or arrangement with his creditors; or Section 5(1)(b) he is of unsound mind or has been convicted within the preceding five years of an offence and sentenced to imprisonment without the option of a fine. Section 5(2)(a) is incapacitated by physical or mental illness; or Section 5(2)(b) has become subject to any of the disqualifications specified in subsection (1) of this section; or Section 5(2)(c) has been absent from two consecutive meetings of the Board without the leave of the Board; or Section 5(2)(d) is otherwise unable or unfit to discharge the functions of his office, Section 5(3)(a) at any time, by notice in writing under his hand addressed to the Cabinet Secretary, resigns his office as such; Section 5(3)(b) dies; or Section 5(3)(c) is declared under that subsection to have vacated his office,

Section 6. Meetings of Board Section 6(1) Meetings of the Board shall be convened by the Chairperson, or in his absence by the deputy Chairperson, at such times and places as he determines but not less than four times a year. Section 6(2) The Chairperson, or in his absence the deputy Chairperson, may at any time, and shall at the request in writing of at least three Directors, convene a special meeting of the Board. Section 6(3) A notice convening a special meeting of the Board shall state the purposes for which the special meeting is convened.

Section 7. Procedure of Board Section 7(1) If the Chairperson is absent from a meeting of the Board, the deputy Chairperson shall act as Chairperson at that meeting. Section 7(2) Three Directors who include the Chairperson or the deputy Chairperson shall constitute a quorum at any meeting of the Board, and all acts, matters or things authorized or required to be done by the Board shall be effected by resolution passed by a majority of the Directors present and voting at a meeting at which a quorum is present. Section 7(3) At every meeting of the Board, the Chairperson, or in his absence the deputy Chairperson, shall have a casting vote in addition to his deliberative vote as a Director. Section 7(4) All orders, directions and decisions of the Board shall be made, given and notified under the hand of the Chairperson or deputy Chairperson, or of the General Manager if he is so authorized by the Board. Section 7(5) Minutes of the proceedings of every meeting of the Board shall be regularly entered in a minute book, and the book shall be kept so as to show proper tabulated details of the business conducted or transacted at each meeting. Section 7(6) The minutes of the proceedings of ea...

Section 8. Matters on which Director may not vote Section 8(1)(a) related to that Director within the third degree of affinity or consanguinity; or Section 8(1)(b) a debtor, creditor, partner or employee of that Director; or Section 8(1)(c) a debtor under a mortgage of a body of persons, whether incorporated or not, of which that Director is a Director or under which he holds any office or position other than that of auditor. Section 8(2) A Director who is in any way whether directly or indirectly, interested in a proposed loan or in a loan then subsisting shall declare the nature of his interest at the first meeting at which he is present when the question of that loan is taken into consideration, if his interest then exists, or, in any other case, at the first meeting at which he is present after he becomes so interested, and shall take all reasonable steps to ensure that such declaration shall be recorded in the minutes of the meeting: Provided that a general notice given by a Director to the effect that he is a member of a specified body of persons, company or firm and is to be regarded as interested in all transactions connected therewith shall be a sufficient declaration unde...

Section 9. Appointment and duties of General Manager Section 9(1) The Board, with the approval of the Cabinet Secretary given after consultation with the Cabinet Secretary for the time being responsible for finance, shall appoint a General Manager of the Corporation, who shall as far as possible be present at all meetings of the Board and shall at such meetings be entitled to speak but not to vote. Section 9(2) It shall be the duty of the General Manager to undertake executive responsibility for the functions of the Corporation and to perform the other functions conferred upon him by this Act. Section 9(3) The General Manager shall act in accordance with any special or general directions which the Board may give him. Section 9(4) The General Manager is hereby empowered to administer oaths and take statutory declarations in matters where statements upon oath and statutory declarations are required by this Act. Section 9(5) In the event of the General Manager being unable to exercise his functions as such through illness, leave, absence from Kenya or other cause, a person shall be appointed in the manner specified in subsection (1) of this section to act as General Manager, and the p...

Section 10. Appointment of staff Section 10(1) The Board may appoint, upon such terms and conditions as it thinks proper, such other officers and servants as it considers necessary or desirable for the efficient conduct and operation of the Corporation. Section 10(2) Every member of the staff shall, subject to this Act, exercise the powers and functions and perform the duties assigned to him from time to time by the General Manager.

Section 11. Remuneration Section The Directors (other than public officers in receipt of salary), the General Manager and the staff shall be paid out of the funds of the Corporation such salaries and allowances as the Corporation, with the approval of the National Treasury, may from time to time determine, and such travelling and other expenses as they may incur in the performance of their duties as such.

Section 12. Pension and provident funds Section 12(1) The Board may, subject to the approval of the Cabinet Secretary and the National Treasury, establish, control, manage, maintain and contribute to pension or provident funds for the benefit of the General Manager and the staff, and may grant pensions and gratuities from any such fund to them on their retirement from the service of the Corporation and to their dependants on their death. Section 12(2) If neither a pension nor a provident fund is established under subsection (1) of this section, or if a fund is established but in the opinion of the Board it provides insufficient benefits, the Board may, with the approval of the Cabinet Secretary and the National Treasury, grant from the funds of the Corporation pensions and gratuities, or additional pensions and gratuities, as the case may be, to the General Manager and the staff on their retirement from the service of the Corporation and to their dependants on their death.

Section 13. Execution of documents Section 13(1) The common seal of the Corporation shall be authenticated by the signature of the Chairperson or deputy Chairperson of the Board and by the signature of the General Manager or some other person so authorized by the Board. Section 13(2) All documents, other than those required by law to be under seal, made by, and all decisions of, the Corporation may be signified under the hand of the Chairperson or deputy Chairperson of the Board, or of the General Manager if he is so authorized by the Board. Section 13(3) Where the General Manager has been authorized under subsection (2) of this section to signify documents he may, with the approval of the Board, authorize any other officer of the Corporation to sign any document approving a loan not exceeding ten thousand shillings. [Act No. 13 of 1972 , Sch., L.N. 23/1977.]

Section 14. Powers of Corporation Section 14(1)(a) to make loans of money in accordance with Part III of this Act and accept repayments thereof; Section 14(1)(b) with the concurrence of, and subject to such limitations as may be imposed by, National Treasury, to borrow money or obtain credit either in Kenya or abroad; Section 14(1)(c) to furnish managerial, technical and administrative advice, or to assist in obtaining such advice, for agricultural industries; Section 14(1)(d) after consultation with the National Treasury, to invest money which is not for the time being needed for discharging the functions of the Corporation in investments for the time being authorized by law for the investment of trust moneys, or to place any such money on deposit at interest with any public body; Section 14(1)(e) to create, make, draw, accept, endorse, execute, issue, discount, buy, sell, negotiate and deal in bills, notes, warrants, coupons, stock, debentures and other negotiable or transferable instruments; Section 14(1)(f) subject to this Act, to mortgage the property of the Corporation to secure the repayment of money borrowed by the Corporation. Section 14(2) Notwithstanding subsection (1) o...

Section 15. Funds of Corporation Section 15(1)(a) all moneys, funds and securities vested in the Corporation by section 48 of this Act; Section 15(1)(b) any money provided by Parliament; Section 15(1)(c) any money borrowed under section 14 (1)(b) of this Act; Section 15(1)(d) any money received by way of interest on, or in repayment of, or otherwise in connexion with, loans made by or vested in the Corporation; and Section 15(1)(e) such moneys as the Cabinet Secretary may from time to time approve as funds of the Corporation. Section 15(2) The Corporation shall pay to the Government interest, at such rate as the National Treasury, after consultation with the Cabinet Secretary and with the Board, may from time to time determine upon any money provided by Parliament and upon any money which, by virtue of subsection (1)(a) of this section, forms part of its funds and was provided by Parliament; and any interest payable under this subsection shall be paid upon such dates as the Principal Secretary to the National Treasury may direct.

Section 16. Reserve fund Section 16(1) The Board shall create a reserve fund which shall be credited from time to time with any net profit earned by the Corporation. Section 16(2) The reserve fund shall be applied by the Board in making good any loss or deficiency which may occur in any of the transactions of the Corporation. Section 16(3) Whenever any balance remains in the reserve fund after providing for any loss or deficiency as aforesaid, it may be devoted to any of the purposes to which any other fund of the Corporation may by this Act be devoted. Section 16(4) The reserve fund created in accordance with subsection (1) of this section shall be credited with any net profit earned by the Corporation until such time as the balance remaining after providing for any loss or deficiency as aforesaid shall exceed ten per centum of the funds of the Corporation as defined in section 15 of this Act, and shall thereafter not be reduced below that level. Section 16(5)(a) the profits of the Corporation; and Section 16(5)(b) the reserve funds of the Corporation. Section 16(6) All amounts paid to the Principal Secretary to the National Treasury under subsection (5) of this section shall be a...

Section 17. Moneys borrowed by Corporation charged on assets Section Any moneys borrowed by the Corporation under section 14 (1)(b) are by this section charged upon the assets of the Corporation, and shall be repayable primarily out of the revenues of the Corporation.

Section 18. Interpretation of Part Section In this Part, "farmer" includes the duly authorized attorney of a farmer, the personal representative of a deceased farmer, a trustee of a farmer appointed by deed or will and a receiver appointed by an order of the court or by a mortgagee even though that person may not have been specifically authorized to mortgage land.

Section 19. Loans to farmers Section 19(1)(a) upon his applying for a loan in writing in such form as the Board from time to time approves; and Section 19(1)(b) upon the authority of a resolution of a meeting of the Board at which the application is properly considered and approved. Section 19(2) A loan, under this section may be made for the purpose of reducing or discharging an existing first mortgage if in the opinion of the Board the terms of the mortgage are onerous: Provided that a loan shall not be made for the purpose of reducing an existing mortgage unless the mortgagee executes a waiver of priority in favour of the Corporation under section 28 of this Act. Section 19(3) A loan under this section shall be made for such period, not exceeding thirty years, and on such terms, as the Board may determine.

Section 20. Charge on the land Section 20(1) Where the Board so directs a farmer who is the registered owner of land which is not encumbered with any mortgage (other than one in respect of which the mortgagee has executed a waiver of priority in favour of the Corporation under section 28 of this Act shall execute a first mortgage of the land in favour of the Corporation. Section 20(2)(a) deliver a written notification of the loan in the prescribed form to the land registrar, who shall register it against the title to the borrower’s land and, where appropriate, endorse a memorandum of the loan on the grant or certificate of title, and thereupon the land shall stand charged with the repayment of the loan and the interest thereon subject to any prior registered charge; and Section 20(2)(b) upon repayment of the loan and all interest due on it, give written notice of the repayment to the land registrar, who shall register it against the title to the borrower’s land and cancel any memorandum of the loan which is endorsed on the grant or certificate of title, and thereupon the charge created in respect of the loan shall be extinguished, Section 20(3)(a) may register a notice under the Mo...

Section 21. Extension of time Section The Board may in its discretion postpone the repayment or extend the time for the repayment of a loan or for the payment of any interest payable thereon, but so that the maximum period for repayment in respect of any loan shall not exceed thirty years.

Section 22. Consent by trustee to short-term loan Section If a trustee consents to his security being postponed to enable a loan to be made, his consent shall not itself be deemed improper or a breach of trust so as to render the trustee liable in respect of any loss resulting from the loan having been made.

Section 23. Loan to co-operative society Section 23(1)(a) upon the society applying for a loan in writing in such form as the Board from time to time approves signed by the Chairperson and the secretary of the society; and Section 23(1)(b) upon the Board being satisfied that the Chairperson and secretary of the society have been authorized, by a resolution of a meeting of the society passed by a majority of two-thirds of the members of the society and which does not offend any by-laws of the society, to apply for a loan; and Section 23(1)(c) upon the society lodging with its application a list of the persons who were members of the society at the time of the resolution; and Section 23(1)(d) upon the Board being satisfied that the accounts, books, papers, and documents of the society are in order; and Section 23(1)(e) upon such security (if any) as the Board may require; and Section 23(1)(f) upon the authority of a resolution of a meeting of the Board at which the application is properly considered and approved. Section 23(2) The Commissioner for Co-operative Development shall, at the request of the Board, furnish such lists and other information as the Board may require regarding a...

Section 24. Examination of books of co-operative society Section The Board shall at all times have full access to all accounts, books, papers and documents of any co-operative society to which a loan has been made or from which an application for a loan has been received, and may cause all such accounts, documents, papers or books to be examined by a member of the staff or by such other person as the Board may appoint.

Section 25. Liability of members of co-operative society Section 25(1) Where a loan is made to a co-operative society, all persons who were members of the society at the time of the application for the loan and are named in the list referred to in section 23 (1)(c) shall be jointly and severally liable to repay the loan and to pay the interest payable on the loan. Section 25(2) If a person who was a member of a co-operative society at the time of the application for a loan and is named in the list referred to in section 23 (1)(c) ceases to be a member of that society, he shall nevertheless remain liable under subsection (1) of this section in respect of any part of a loan and any interest which was outstanding at the time he ceased to be a member, and on ceasing to be a member he shall provide security to the satisfaction of the Board for the due discharge of that liability. Section 25(3) Where a co-operative society is a company registered under the Companies Act (Cap. 486), the liability of the shareholders of the company is limited to the amount (if any) of the share capital not called up, and subsection (2) of this section shall not apply to a person who has ceased to be a shar...

Section 19A. Repayment of Loans Section The repayment of any loan made under subsections 14(1) and 19(1) shall be made to the Corporation or to any branch thereof in accordance with rules made under this Act. [Act No. 8 of 2008 , s. 43.]

Section 26. Rate of interest, and form of security Section 26(1) A loan shall bear such rate of interest as the Board with the approval of the Cabinet Secretary for the time being responsible for finance given after consultation with the Cabinet Secretary, may prescribe, either generally or for any particular class of loan. Section 26(2) A mortgage given under this Act shall be in such form as is prescribed under any written law relating to that mortgage or, where no such form is prescribed, in such form as the Board may determine.

Section 27. Appraisal of land offered as security Section The Board, if it considers it desirable, shall cause land offered as security for a loan to be appraised by an appraiser, and in such case the appraiser shall render to the Corporation an appraisal of the land in a form approved by the Board.

Section 28. Waiver of priority Section Any mortgagee may, by waiver endorsed upon or incorporated in the mortgage, agree that a mortgage in favour of the Corporation shall have priority, either for the purposes of this Part or for any of the other purposes of this Act, over his mortgage, and such agreement when registered in the same manner as the mortgage held by him shall for all purposes be binding upon him and as from the date of registration upon his successors in title.

Section 29. Loan to be taken up within three months Section If a loan has been authorized by the Board and the applicant does not, within a period to be fixed by the Corporation (but not exceeding three months after the applicant has been notified of the authorization), execute such documents as the Board may consider necessary to complete the security and lodge them with the Corporation together with the title deeds of and other documents relative to the applicant’s title to the property (if it is to be mortgaged), the Board may withdraw its authorization of the loan, and in that event the loan shall not be made and no part of the fees paid in connexion with the application shall be refunded.

Section 30. Covenants and conditions to be implied in mortgages Section 30(1) In every mortgage or other security document executed to secure a loan, there shall be implied on the part of the farmer and in favour of the Corporation the covenants and conditions set out in the Schedule to this Act. Section 30(2) All such covenants and conditions shall extend to and bind the successor in title of the mortgagor.

Section 31. Corporation may withhold loan where debtor in default Section at any time any sum of money, whether principal or interest, due in respect of the loan is unpaid; or

Section 32. Application of money repaid prematurely Section 32(1) If a person to whom a loan has been made under this Act (in this section referred to as a borrower) at any time pays to the Corporation an amount in excess of the instalment then due under the mortgage, the Corporation may, if it thinks fit, on the date when the next instalment falls due, apply such amount in payment of the capital portion of one or more of the instalments which would otherwise thereafter fall due, and the instalments may then be recalculated on the basis of balance of capital owing by the borrower over the remainder of the period for which the loan was originally made. Section 32(2) Such an excess payment, and its application by the Corporation as provided in subsection (1) of this section, shall not exempt the borrower from paying his next instalment when it is due, reduced or recalculated where appropriate. Section 32(3) The Corporation may allow a borrower a rebate of interest, in respect of money paid prematurely, and the rebate shall be in the form of a reduction of the rate of interest charged on that money by one per cent per annum from the date of the payment up to the date when the next ins...

Section 33. Procedure for recovery on default by occupation or sale of property Section 33(1) In any of the circumstances or events mentioned in section 31 of this Act, the Corporation may, by notice served on the person to whom the loan has been made or his personal representative (in this section referred to as the debtor) personally or by post, demand repayment of the loan and, after due notice of such demand has been served in similar manner on all subsequent mortgagees of the land on the security of which the loan was made, the Corporation may, without recourse to any court, enter upon the land and either take possession of or sell by public auction through a licensed auctioneer the whole or (where subdivision is not prohibited) any part of the land upon such terms and conditions as the Board may in all the circumstances consider proper. Section 33(2) At a public auction held in pursuance of subsection (1) of this section, the Corporation, by its agent duly authorized in writing, may bid for and purchase the whole or any part of the land offered for sale. Section 33(3) The Corporation, as agent of the debtor, may transfer the land to itself or any other purchaser and give a go...

Section 34. Inspection of land Section For the purpose of ascertaining whether a loan has been or is being properly applied, any member of the staff, or any person deputed by the Corporation to inspect land under this Act, may enter upon any land in respect of which the loan was made and make such inspections thereon as he considers proper.

Section 35. Protection against liability Section the land comprised in any mortgage or other security document in respect of the development of which a loan was granted was not used, or was not used, as the case may be, for agricultural purposes; or

Section 36. Power of Corporation to inspect valuation rolls Section The Corporation may inspect without fee or charge the valuation roll of any local authority which now exists or hereafter exists, and it shall be the duty of officers of a local authority, upon application, to supply to the Corporation without fee or charge, particulars as to any valuation of rateable property in respect of which the local authority has the power to levy rates.

Section 37. Power of Corporation to hold land Section 37(1)(a) required for its business premises; or Section 37(1)(b) required for the provision of housing accommodation for the staff; or Section 37(1)(c) acquired as the result of foreclosure or otherwise on account of indebtedness to the Corporation, Section 37(2) All developed land acquired in accordance with subsection (1)(c) of this section shall be sold at the earliest favourable opportunity upon such special terms and conditions as the Corporation may determine, but the Directors, the General Manager and members of the staff shall not buy directly or indirectly any land sold in pursuance of this subsection.

Section 38. Power of Corporation to appoint appraisers Section 38(1) The Corporation may appoint appraisers to inspect and appraise land for the purposes of this Act. Section 38(2) Fees and travelling expenses of appraisers shall be paid in accordance with rates specified by the Corporation with the approval of the National Treasury, and shall be payable by the applicants. Section 38(3) Every administrative officer, Government surveyor, police officer or other public officer shall, without additional emolument, when required by the Corporation to do so, report on any cases submitted to him and generally act as agent or inspector of the Corporation.

Section 39. Power of Corporation to act as agent Section The Corporation may be appointed and may act as agent of the Government in the making, administration and recovery on behalf of the Government of any loans to farmers or others: Provided that no expenses of such agency shall fall to be paid from the funds of the Corporation, and the Corporation shall be indemnified by the Government against any losses, costs and expenses which may be sustained or incurred by the Corporation in the performance of such agency.

Section 40. Publication of accounts Section 40(1)(a) the assets and liabilities of the Corporation on that date; and Section 40(1)(b) a profit and loss account of the Corporation for the year. Section 40(2) Every such statement shall be signed as correct by the General Manager and at least two Directors. Section 40(3) The Cabinet Secretary shall cause every statement delivered to him under subsection (1) of this section to be laid before the National Assembly. Section 40(4) In addition, the General Manager shall render to the Cabinet Secretary promptly such other accounts, reports and statements as the Cabinet Secretary may from time to time require.

Section 41. Inspection and audit of accounts Section 41(1) The National Treasury shall have full access to all accounts, documents, papers and books of the Corporation, and the General Manager shall at all times furnish to the National Treasury all such information as it may require. Section 41(2) The accounts of the Corporation shall be examined, audited and reported upon annually by the Auditor-General. [Act No. 12 of 1985 , Sch.]

Section 42. False statements Section Any applicant for a loan who wilfully fails to disclose any material information within his knowledge, or who wilfully makes any statement which he knows to be false or does not believe to be true, shall be guilty of an offence and liable to imprisonment for a term not exceeding three years or to a fine not exceeding five thousand shillings or to both such imprisonment and such fine and shall further be liable to have any loan made to him cancelled forthwith and to repay to the Corporation forthwith all sums lent to him together with interest thereon.

Section 43. Corrupt acts Section 43(1) If a Director, the General Manager or a member of the staff, or any appraiser, inspector or agent appointed by the Corporation, directly or indirectly receives any fee or reward (other than as authorized by or under this Act) from any person in respect of or in connexion with a loan or an application for a loan, he shall be guilty of an offence and liable to imprisonment for a term not exceeding five years or to a fine not exceeding ten thousand shillings, or to both such imprisonment and such fine. Section 43(2) If any person in respect of or in connexion with a loan or an application for a loan, bribes or corruptly influences a Director, the General Manager or a member of the staff, or any appraiser, inspector or agent appointed by the Corporation, he shall be guilty of an offence and liable to imprisonment for a term not exceeding five years or to a fine not exceeding ten thousand shillings, or to both such imprisonment and such fine. Section 43(3)(a) having a pecuniary interest in any land offered as security for a loan; or Section 43(3)(b) being a debtor, creditor, partner or employee of an applicant for a loan or being related to such an...

Section 44. Secrecy Section 44(1) Any person who is on official duty under, or is employed in the administration of, this Act shall treat all documents, information, returns and forms relating to an application for a loan or the making of a loan as secret. Section 44(2)(a) other than a person to whom he is authorized by proper authority to communicate it; or Section 44(2)(b) otherwise than for the purposes of this Act,

Section 45. Rules Section the meeting and proceedings of the Board;

Section 46. Regulations Section scales of application fees and appraisal fees based on the amount of the loan for which application is made;