Nairobi — Smallholder farmers in rural areas will now be able to access financial services following the signing of a partnership between the government and the International Fund for Agricultural Development (IFAD).
Dubbed 'Rural Kenya Financial Inclusion Facility (RK FINFA)', the initiative targets youth, women, and people living with disabilities.
The programme, which will run for a period of six years, seeks to improve rural and green financing for small-scale farmers as well as provide them with technical assistance in the food value chain and marketing.
While the state will pump in Sh10.68 billion ($134.04 million) into the kitty, Sh3.23 billion ($22 million) will come from partners and the private sector.
Treasury Principal Secretary (PS) Chris Kiptoo said that the agricultural sector contributes immensely to Kenya's gross domestic product (GDP) at 23 percent, thus its importance to the economy.
Nevertheless, Kiptoo agreed that the sector faces a myriad of challenges, including limited financial inclusion, technological drawbacks, and climate change effects that have lowered productivity, resulting in a rise in food insecurity in the country.
Therefore, the new financing vehicle will mobilize finances that will be channeled to small farmers.
"These are new affordable private finance funding. Green finance provides farmers with the financial assistance and market. This will help create jobs and boost employment in both rural and urban areas," the PS said.
Similarly, IFAD Country Director Mariatu Kamara stated that financial inclusion will ensure farmers overcome the above challenges.
She added that most farmers in Kenya cannot secure loans from financial institutions as they lack collateral.
"More needs to be done to ensure all farmers benefit from financial inclusion," Kamara stated.
"This launch is long overdue, farmers have been waiting," she said.