Cabbage farmer in Nyamira County, Western Kenya. Crop producers always face various farming challengers which are traced to finance. Photo Milton Patrice.
Smallholder farmers in Kenya are set to access loans with maturities of up to seven years, longer than commonly available in the market thanks to a Sh5.7bn financing programme launched on Wednesday by European Investment Bank (EIB) in partnership with Equity Bank to help them boost their production.
The Kenya Agriculture Value Chain Facility represents the first dedicated support for long-term investment by agriculture companies in Africa backed by the European Investment Bank.
“Working with Equity Bank across the country on the new Kenya Agriculture Value Chain Facility will help agriculture companies to modernise and harness the full economic, employment and export potential of agriculture,” said Catherine Collin, European Investment Bank regional representative for East Africa.
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Equity Bank is the first Kenyan partner to participate in the facility.
“Equity Bank has aligned its strategy with the Big 4 agenda, to focus on growing the Agribusiness portfolio through servicing all segments from retail, to SME to large enterprises and corporate banking customers,” said Polycarp Igathe, Equity Bank Kenya Managing Director.
“This credit facility will be used for on-lending of up to 50 per cent of project costs to beneficiaries who are eligible. The enterprises we are targeting include Value Chain SMEs in agribusinesses that are supporting a smallholder farmer base,” added Igathe.
Agriculture is the leading source of economic activity, employment and exports in Kenya.
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The new initiative is designed to increase investment activity by agricultural companies and by making available funding in Kenya Shillings will mitigate against exposure to foreign exchange risks that currently hinder agriculture investment.
The impact of the new Kenya Agriculture Value Chain Facility will be strengthened by a dedicated technical assistance programme.
This will improve financial assessment and monitoring of long-term agriculture investment by local banks.
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The new European Investment Bank financing scheme will be supported by a €10 million(Sh 1.145billion) grant under European Union’s Kenya AgriFI programme.
“It is good to see the European Union’s bank partner with Equity Bank as this is the first time the EU funds the private sector in the agricultural sector in Kenya directly,” said Walter Tretton, Chargé d’affaires of the European Union delegation to Kenya.