Government Waives Interest and Penalties on Land-Settlement Loans Worth Sh12.3 Billion
By Chemtai Kirui | NAIROBI,
The government has approved the waiver of interest and penalties on land-settlement loans worth about Sh12.3 billion, offering relief to thousands of settlers who have struggled to repay debts dating back decades.
The Cabinet, chaired by President William Samoei Ruto on Tuesday, said the move is aimed at “restoring economic dignity” to Kenyans who benefited from post-independence resettlement programmes but remained burdened by accumulated interest and penalties.
The waiver applies to loans issued under the Land Settlement Fund Board of Trustees (LSFBT) — a post-independence initiative established to resettle landless Kenyans on former colonial farms and government-acquired land.
These settlements formed part of historical land redistribution programmes that began in the 1960s and 1970s, when the government purchased land from departing white settlers and subdivided it among local families.
The Land Settlement Fund Board was created under the Agriculture Act (Cap 318) and managed by the Ministry of Lands. It offered soft loans to help landless families acquire agricultural land.
Many beneficiaries — mainly smallholder farmers across 26 counties — are based in the Rift Valley (Nakuru, Uasin Gishu, Trans Nzoia, Nandi, Baringo, and Kericho), Central (Nyandarua, Laikipia, Murang’a, and Kiambu), and Coastal and Eastern counties such as Kilifi, Taita Taveta, Meru, Embu, and Kitui.
Some smaller schemes also exist in Western and Nyanza regions, including Kakamega and Kisumu.
Many of these farmers have been unable to complete repayment due to poor harvests, rising input costs, and limited market access.
According to the Cabinet dispatch, the Ministry of Lands, Public Works, Housing and Urban Development, under Cabinet Secretary Alice Wahome, will oversee the implementation through the Land Settlement Fund Board.
The process will adhere to the Public Finance Management Act, with a 12-month moratorium to allow beneficiaries to clear their outstanding principal balances.
The government said the waiver is expected to pave the way for thousands of title deeds to be issued to families who have occupied their parcels for years but lacked legal ownership due to unsettled balances.
“The decision is intended to secure land rights, unlock agricultural productivity and improve rural livelihoods,” the Cabinet statement said.
The Cabinet also directed the Lands Ministry to fast-track the digitisation of land records under the Ardhisasa platform to enhance accountability and speed up title processing.
Officials said the initiative forms part of wider government efforts to support small-scale farmers and strengthen rural economies through access to affordable credit, irrigation, and mechanisation.
Land experts say the waiver could boost confidence in ongoing regularisation and titling programmes while addressing historical injustices tied to land ownership, an issue that has remained politically sensitive in Kenya for decades.
However, they caution that the process must be transparent to ensure genuine beneficiaries benefit. Experts warn that clear communication, verification, and monitoring will be critical to prevent fraud or double allocation.
If effectively implemented, they said, the plan could resolve one of the country’s longest-standing land disputes, granting settlers long-term ownership security while spurring agricultural investment in underdeveloped regions.
