Africa is billed as the last frontier when it comes to feeding the world. The vast fertile land, massive rivers and an amenable climate should transform the continent from a food deficient continent to a rich food exporter.
Alas, this is not the case.
At least not yet. Ironically, over the decades, Africa has gained the dubious reputation as a drought and hunger stricken continent. Meteorological departments have regularly issued warnings that the climatic conditions for farming will only become harsher, leading to poorer harvests.
All this begs the question of our true standing in the looming face of severe food insecurity.
Undoubtedly, the once predictable seasons are changing and presently, the future of food security in the country seems bleak.
Just recently, the Intergovernmental Authority on Development (IGAD) reported that Kenya is facing its worst drought in 38 years.
According to IGAD, the rainfall deficit, if it comes to pass, will plunge the country into a crisis that will see food insecurity and malnutrition take centre stage in undermining economic development.
Official estimates indicate that over 10 million Kenyans are food insecure with a majority relying on relief food from time to time. This is underpinned by a high proportion of the population having no access to food in the right amounts and quality. Households incur huge food bills due to the increasing food prices, contributing to a surge in inflationary pressure.
In Kenya, USAID reports that about 75 per cent of Kenyans derive all or part of their livelihoods from the agricultural sector, accounting for 18 percent of the Gross Domestic Product (GDP).
Agriculture is the engine of economic growth in Kenya, and a valuable source of income for the majority of Kenyans. Despite playing such a critical role in job creation, the agriculture sector has traditionally been off the radar of financial Institutions, even when ample liquidity exists in their balance sheets.
Farmers have traditionally been hugely underserved by most financial institutions given the perceived risk associated with the business. To obtain loans from banks, farmers had to meet some strenuous conditions which included proof of possession of land titles, farm machinery, stock inventories and guarantors. This left most farmers locked out of the credit system forcing them to resort to bootstrap funding – a mode of starting a business without external help or capital.
Luckily for farmers, that is changing.
In the last decade, the agricultural sector has experienced a wave of increased interest in boosting the sector’s productivity.
Both public and private sector institutions have recognized the sector as a promising investment that serves to address a national challenge.
Additionally, the integration of technology with standard agricultural practices has set the pace for increased productivity and better quality of produce.
However, after the identification of appropriate technologies and the development of market support systems that ensure close links with local knowledge and communities, what else is needed to achieve food security?
For small-scale farming in Africa to be sustainable, farmers need better access to new technology and affordable credit in order to sustain their investments. As such, small holder farmers require training and sensitization on market dynamics and financing options available to boost access to finance.
KCB Bank is playing its part in all this through its farming solution, KCB MobiGrow, a mobile based banking solution enabling farmers to access agro-customized financial services including short term and seasonal loans, in partnership with the Mastercard Foundation.
KCB MobiGrow empowers farmers financially by allowing its customers to borrow input loans, receive produce payments, pay agro dealers, and access free SMS based agro support.
Through the programme, farmers are also given agronomical support through training in best practices for farming and in building forums for industry dialogue. It works in partnership with non-financial entities including county governments, development agencies, input providers, aggregators, and off-takers to ensure that it brings financial inclusion to more small holder farmers.
This collaborative mode of engagement ensures that non-financial services provided by our partners, such as capacity building forums, are bundled together with tailor-made financial services which drives sustainability with the ultimate goal of improving the lives of small holder farmers.
In order to achieve Kenya’s food security agenda, more players in the private sector must be encouraged and incentivized to innovate.
This can be achieved through the design and development of a wide range of instruments, either as a technical assistance or part of lending projects: value chain finance and credit guarantee schemes for the agricultural sector.
In the banking industry, the development of more mobile banking and payment platforms to enhance access to finance and reduce transaction costs within the eco-system are playing a positive role in changing the industry dynamics.
An important focus in this area, should be to reduce the risk in agriculture by addressing systemic risks such as climatic conditions through crop insurance and the operating costs by reaching out to smallholder farmers and SME agribusinesses.
Therefore, modern agricultural practices backed by partnerships with financial institutions will be a necessary pre-requisite to changing the way farming is perceived.
Change is inevitable and therefore our farming models must also evolve.
(The writer is the Head of KCB MobiGrow Programme [email protected])