Cabinet Waives Interest on Land Settlement Loans to Ease Burden on Low-Income Families

The Cabinet has approved a waiver of interest and penalties on outstanding land settlement loans, in a move aimed at easing the financial burden on low-income settlers and supporting the government’s Bottom-Up Economic Transformation Agenda.

In a statement released after its meeting on Tuesday, the Cabinet said the decision was based on recommendations from the Land Settlement Fund Board of Trustees, which reported that many settlers have struggled to repay loans due to economic hardship and declining agricultural productivity.

The waiver is expected to benefit thousands of families living in 520 settlement schemes across 26 counties, covering a debt portfolio estimated at Sh12.3 billion.

“Beneficiaries will now be able to obtain title deeds, use them as collateral for investment, and regularise land accounts that have been in arrears for decades,” the statement read.

The government says the move will help resolve historical land issues, boost farm production, and unlock land value for economic use. Beneficiaries will be given a 12-month grace period to clear the remaining principal balances, in line with the Public Finance Management Act.

Meanwhile, the Cabinet has also approved a Comprehensive Framework for Infrastructure Projects Pricing aimed at preventing inflated costs and ensuring transparency in public construction projects.

The new framework seeks to eliminate irregular pricing practices that have led to cost overruns and variations in past infrastructure projects. It will introduce a data-driven approach to determining construction costs and ensure accountability in the use of public funds.

Oversight of the reform will be led by the Chief of Staff and Head of Public Service through a Multi-Agency Technical Working Team. The team has already begun developing sector-specific pricing models, cost calculation systems, and a National Infrastructure Pricing Database (NIPD).

According to the Cabinet, Kenya has invested heavily in infrastructure over the last 20 years but continues to experience inconsistent costs due to reliance on outdated pricing estimates.

The new approach, known as the First Principles Approach (FPA), is used in countries such as the UK, Australia, and Singapore and could help reduce project cost overruns by up to 25 percent.