Kenya could see a significant increase in agriculture funding with improvement of rural infrastructure and adoption of smart solutions that support the value chain.
According to speakers at the Financing Agriculture Sustainability 2024 conference, poor state of rural infrastructure such as lack of proper access roads and electricity which have contributed to the high rate of post-harvest losses have denied the sector the much needed funding from potential financiers in the private sector.
Despite being the single largest contributor to Kenya’s GDP and employs more than 40pc of the total population and 70pc of the rural Kenya population, the sector is the least funded of the economy whose gross loans account for only 3.6pc of total lending, leaving an estimated funding gap of Ksh 2.94 trillion.
“Many of our SMEs and agri-enterprises may not qualify because they are considered high risk. So in the absence of knocking the doors of the bank, where else do they knock and you find that because there has been a gap, every other person mushrooming with a potential solution that is not carefully thought about and crafted,” said Dr Charity Mutegi, Rootooba Chief Executive Officer and FINAS 2024 Conference Director.
Speaking during the event, Agriculture Cabinet Secretary Mithika Linturi admitted that there is still limited funding the sector receives in both national and county governments.
Linturi said close collaboration with the private sector to channel funding to the sector will ensure farmers across the country have access to affordable credit.
“The increased appetite for finance by farmers is because of the good will that is coming from government that has attracted many people to come in it. We are talking about subsidy of inputs and these must be supported,” added Linturi.
Adoption of technology is further backed to help the sector in enhancing market access as well as ensuring product traceability to make agriculture products competitive with high returns, a factor that will further help attract private funding to the sector.
“The outcomes of the FINAS 2024 conference are expected to be a validated resource for government and private sector to enable design and planning for resourcing initiatives in the agricultural sector,” added Linturi.
The two-day conference organized by Rootooba in collaboration with Ministry of targets to take stock of the country’s ongoing financing options for the agricultural sector, including bottlenecks, propose ways of accurately determining the level of agricultural financing to inform policy direction.
