NAIROBI, Kenya, Oct 16 – President Mwai Kibaki is encouraging the agricultural sector to come up with ways of increasing lending from commercial banks to farmers so that the sector becomes competitive in order to attract and develop a generation of young farmers.
Speaking at the launch of the 3rd Agricultural Development Forum, the President noted that the agricultural sector has over the years been viewed as a risky investment for which commercial banks are unwilling to extend loans, more so to smallholders.
“Although the lending by commercial banks to the sector has increased from about Sh25 billion in 2002 to about Sh53 billion last year, this is still way below the sector’s potential,” he explained.
“Loans to the agricultural sector account for only three percent of the total banks’ lending portfolio,” he added.
He explained that the agricultural sector is the backbone of Kenya’s economy, emphasising that access to credit for farmers must be improved by at least 15 percent of the lending portfolio of banks, for the sector to thrive and become globally competitive.
The President added that he’s concerned that the average age of the Kenyan farmer is 60 years and yet a large percentage of the population is under 35 years.
“If this trend continues, the agricultural sector will experience a decline in the years to come and we will continue to struggle with high unemployment among our youth,” he said.
“For agriculture to remain a key driver of our economy, we must attract and develop a generation of young farmers who will bring not only their energy and skills to the sector but also innovative and modernised farming methods,” he added.
He pointed out that the agricultural sector has recorded remarkable growth over the last nine years, registering a growth rate of about six percent last year.
“Increased production has seen poverty levels drop by 10 percent while the incidence of food insecurity is down 15 percent,” he said.
“In addition, we have successfully revived numerous public institutions in the agricultural sector among them the Kenya Cooperative Creameries, Kenya Meat Commission, Agricultural Finance Corporation and the Coffee Research Foundation,” he added.
He noted that the tea, horticulture, sugar, fishing and dairy products sub-sectors have performed very well with tea becoming the country’s leading foreign exchange earner with export earnings now standing at about Sh110 billion, up from Sh33 billion.
In horticulture, the value of exports has more than tripled from about Sh29 billion in 2003 to about Sh90 billion last year, while maize production increased from 30 to 37 million bags.
Rice increased from 40,000 to 91,000 metric tonnes, while wheat production is up 30 percent, while milk production increased from two billion to 5.8 billion litres valued at Sh300 billion, up from Sh100 billion ten years ago.
He added that the government is constructing satellite abattoirs in Wajir, Isiolo, Garissa and West Pokot, while another 17 slaughter houses are being constructed in various parts of the country.
The President acknowledged that despite the growth of the sector during his presidency, the sector is still struggling and will require further development and investments to become globally competitive.
“In spite of this progress, the agricultural sector still faces a number of challenges which include market access; funding for research and development; access to credit; and the age of the Kenyan farmer,” he noted.
“There is also the emerging challenge of how to implement agricultural development under devolved governments,” he added.