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Kenya: Sh3 Billion Kitty for Farmers
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The East African Standard (Nairobi)
7 May 2008
Posted to the web 7 May 2008
Tom Mogusu
Nairobi
A Sh3 billion fund has been set up to help small-scale farmers.
The kitty, pooled by Government, Equity Bank, the Alliance for a Green Revolution in Africa (Agra) and the International Fund for Agricultural Development (Ifad), will provide smallholder farmers and small agricultural enterprises with credit at a time when global fertiliser, commodity, fuel and food prices have more than tripled in the last one year.
It also comes at the back of post-election crisis that effectively interfered with agriculture, especially in the food basket areas of the Rift Valley, Western and Nyanza provinces.
The deal will see Agra and Ifad provide $2.5 million (Sh150 million) each for a $5 million (Sh300 milion) credit guarantee facility. It will lower the risk of lending by Equity Bank to farmers and rural farm input supply shops.
President Kibaki said on Tuesday the fund would break the poverty cycle and transform agriculture into a commercial venture.
He signed an agreement at the Grand Regency Hotel, Nairobi to boost the loan facility and increase access to affordable financing for 2.5 million farmers and a 15,000 agricultural chain in rural input shops and fertilisers. The facility will also benefit seed wholesalers, importers, grain traders and food processors.
"This initiative is expected to make a major contribution towards efforts to eradicate absolute poverty," President Kibaki told the signing ceremony attended by key players in agriculture.
The Prime Minister, Raila Odinga, and the Minister for Agriculture, William Ruto, Equity Bank Chairman, Mr Peter Munga, and chief executive, Mr James Mwangi, attended the function.
Although the credit requirements for the agriculture sector is estimated at Sh60 billion, the Head of State said the new credit line will play a significant role in addressing food security and improving production.
He said the new initiative comes at a time when global food prices have increased by 40 per cent in the past six months alone.
Intervention measures
In Kenya, the figure stands at 30 per cent "and for a country which relies on agriculture as the backbone of the economy, the high cost of basic food has a devastating effect on the livelihood of our people".
As part of its intervention, the Government is planning to increase the Sugar Development Fund from Sh3.2 billion to Sh4 billion. The Coffee Development Fund will be raised from a low of Sh750 million to Sh2 billion in the next two years.
Other measures include the establishment of commodity funds to increase access to credit for farmers and agro-dealers.
According to Ruto, the Agriculture ministry has started several intervention measures that should not only boost local production, but also cushion farmers from run-away fertiliser prices.
"We are increasing participation in the procurement of fertiliser," he said.
Under the initiative, the ministry's spending on agriculture will increase from just eight per cent to 40 per cent "as a way of stabilising fertiliser prices at the market".
The ministry will also increase spending on research and development, and seed certification. It will also accelerate the transformation of agriculture into a commercial business.
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"We also want to increase the availability of credit to the farmers. We have started persuading banks to provide credit because that is the surest way of fighting inflation, improving economic growth and, generally, fighting poverty," said Ruto.
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| Copyright © 2008 The East African Standard. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here. | |||||||||||||||||||||||||||||
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