- Agriculture PS Kello Harsama said this is expected to impact over 2.6 million farmers.
- In the past five years AFC has disbursed over Sh20 billion to actors in the agriculture sector.
Image: FILE
The Agricultural Finance Corporation is seeking Sh100 billion to offer affordable loans to women, youth and smallholder farmers.
Agriculture PS Kello Harsama said this is expected to impact over 2.6 million farmers, with a special focus on women, youth, smallholders and agri-micro small and medium sized enterprises.
The PS spoke during an investors' engagement conference that brought together key partners to help address the challenges facing the agricultural sector and explore innovative ways to bridge the funding gap.
Livestock PS Harry Kimtai said the investment will go a long way in supporting livestock keepers in restocking their animals after the drought that had affected more than 21 Asal counties, where more than two million livestock died.
AFC receives loan applications totaling over Sh15 billion annually but is only able to offer about Sh4 billion.
AFC managing director George Kubai attributed the low availability to resource constraints.
"Notably, the agricultural credit demand for the country is over Sh40 billion annually. This indicates a significant funding gap which hinders the productivity and profitability of the sector," said Kubai.
He said in the past five years AFC has disbursed over Sh20 billion to actors in the agriculture sector including micro small and medium sized enterprises, women and youth providing them with sustainable support needed to grow and expand, " added Kubai.
He noted that value chain actors also face the additional challenges of inadequate financing, poor infrastructure, climate change, post-harvest losses and market inefficiencies.
To address some of these challenges, Kubai said AFC has collaborated with AGRA and FSD Kenya to sustainably impact the agri-finance space.
"This partnership has seen the development of transformative business models aimed at effectively channeling agricultural capital and risk tools to value chain actors in the agricultural sector," Kubai said.
"These new business models are derived from AFC's medium term strategy, its transformation agenda, and the government's Bottom-up Transformation Agenda (BETA). The models include wholesale lending, credit guarantee, warehouse receipt and mechanization.
"These models have been developed at a critical time, going by the huge investment needed in the agricultural sector to support its recovery from the Covid-19 pandemic and the ravaging drought," Kubai added.
He said the wholesale lending model developed through the support of AGRA, IFAD and the National Treasury has been tested with eight saccos borrowing over Sh1 billion with less than one per cent non-performing loans.