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Uganda: New Credit Scheme to Benefit Kenyans
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The Monitor (Kampala)
9 May 2008
Posted to the web 9 May 2008
Elias Biryabarema
Subsistence farmers and small businesses in Kenya will now have easier access to finance following the launch of a credit scheme aimed at helping them achieve sustainability in their economic activities and climb out of poverty.
The scheme brings together Alliance for a Green Revolution in Africa (AGRA), Equity Bank Limited, the International Fund for Agricultural Development (IFAD) and the Kenya Ministry of Agriculture for a loan facility of US$50 million "to accelerate access to affordable financing." About 2.5 million farmers and 15,000 agricultural value-chain members such as rural input shops, fertilisers and seed wholesalers and importers, grain traders and food processors are to benefit from the loan facility.
"As Kenya rebuilds following a tumultuous period, there are still many challenges ahead. There are lots of internally displaced persons. Many have lost their lands and ability to produce food," said Mr Kofi A. Annan, Chair of the Board of AGRA and former Secretary-General of the United Nations in a statement released on May 6.
Vast areas of Kenya now have enormous challenges of getting access to affordable seeds and fertilizers. Unless urgent measures are taken, said Mr Annan, food insecurity will deepen.
He asserted that the partnership of AGRA with the Equity Bank, the Government of Kenya and IFAD would boost food security and create badly needed jobs in rural areas.
AGRA has said it will work with banks across African countries to establish similar schemes.
Equity Bank's loan facility of $50 million will operate against a $5 million "cash guarantee fund" from AGRA and the International Fund for Agricultural Development. This fund would reduce part of the risk of lending by Equity Bank, adding a much needed element of security.
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Equity Bank recently bought Uganda Microfinance Limited (UML), one of the BoU-supervised micro deposit taking MFIs in Uganda and the farmer credit programme could be extended to Uganda in future.
"The African green revolution cannot occur unless farmers can access and afford improved farm inputs. And access to finance is a basic, previously unmet, need for farmers struggling to increase their productivity," said Dr Akin Adesina, Vice President of Policy and Partnerships for AGRA. The loans will be offered at a 10 percent interest rate per annum.
The programme was designed to boost agricultural productivity and household incomes, create employment, and bring training, targeted subsidies, and insurance programmes to the poor smallholder farmers.
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