Sh3 bn credit line launched for farmers

May 9, 2008
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NAIROBI, MAY 6 – President Mwai Kibaki has directed the ministries of Agriculture and Finance to increase their budgetary allocations to buy grain and cereal produce from farmers to increase the country’s strategic grain reserve and counter the threat to national food security.

Speaking during the launch of a Sh3.2 billion credit facility, dubbed ‘Kilimo Biashara Partnership’, geared towards providing affordable credit to low income farmers in the country, President Kibaki said the government intends to increase the grain reserve from the current 4 million to 8 million bags to cover for three months of the national requirement, over the next two years.

The President said his administration had undertaken measures to improve the performance of the agricultural sector to mitigate the devastating effects of the high cost of basic foods as a result of escalating fuel prices, high cost of agricultural inputs and rapidly growing demand for cereals for use in bio-fuel production. 

He said the government would not allow unscrupulous people to take advantage of a threatening situation to degenerate into panic buying and speculative hoarding of commodities.

The President further directed the Minister for Agriculture to come up with interventions that would ensure that the prices of fertiliser and seeds are affordable to low income farmers, to increase farm production.

He also challenged the Ministry for Local Government to expand the wholesale fresh produce marketing infrastructure in Nairobi, Mombasa, Kisumu, and Nakuru.

“Farmers need reliable markets and marketing infrastructure for them to sell their produce. We also need to develop proper market infrastructure in the rural areas.  As a start, let us ensure that there is a proper market in every district headquarters.”

The President said among the key measures the Government had taken is the provision of affordable credit to farmers, including upping the Sugar Development Fund from the current Sh3.2 billion to Sh4 billion, and the Coffee Development Fund from the current Sh750 million to Sh2 billion in the next two years.

He said the Government would also continue to establish commodity-specific funds to increase access to credit for farmers and agro-dealers.

“Our farmers are hard working, but their efforts are continuously being frustrated by inadequate resources to buy fertilisers and other inputs that will enable them to increase productivity and improve their incomes.”

Noting that the Kilimo Biashara Partnership was the first of its kind in the country, the Head of State called on more development partners and other banks to emulate this example.

The venture between Equity Bank, the Alliance for Green Revolution in Africa (AGRA) in partnership with the International Fund for Agricultural Development will see 2.5 million farmers access loans through the bank.

Equity Chief Executive Officer James Mwangi said farmers deserve access to the credit and loans that would enable them to make a profit and continue Kenya’s trajectory of growth.

AGRA Board chairman Kofi Annan, who was represented by his deputy Akin Adesina, said the initiative would assist boost food security and create badly needed jobs in rural areas.

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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