The European Investment Bank (EIB) has boosted small holder farmers in the country with a sh5.7 billion financing program to the Kenya Agriculture Value Chain Facility.
The new initiative represents the first dedicated support for long-term investment by agriculture companies in Africa backed by the European Investment Bank, the world’s largest international public bank. The scheme is designed to tackle specific investment gaps currently hindering expansion in the sector.
Announcing the facility, Catherine Collin, European Investment Bank regional representative for East Africa said they are pleased to launch their first dedicated support for long-term investment in African agriculture.
Equity Bank is the first Kenyan partner to participate in the Kenya Agriculture Value Chain Facility and other financial institutions are expected to join later. Equity Bank is one of the key financial institutions supporting the agricultural sector in Kenya and is a leading provider of financial services to rural communities and smallholders.
Polycarp Igathe, Equity Bank Kenya Managing Director said that the focus on the Agribusiness portfolio through servicing all segments from retail, to SME to large enterprises and corporate banking customers will also help in aligning with the National Government’s Big 4 Agenda includes Manufacturing and Food Security.
“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.
Unlocking long-term investment to strengthen Kenyan agriculture
The new agriculture financing initiative will address the gap of long-term funding in the sector identified as a key barrier to growth.
Agriculture is the leading source of economic activity, employment and exports in Kenya. Agriculture contributes directly and indirectly to 51 per cent of Kenyan GDP and accounts for 60 per cent of jobs in the country.
Under the new financing programme agricultural companies across Kenya will be able to access loans with maturities of up to seven years, longer than commonly available in the market. This is expected to help companies to expand, upgrade and modernise their equipment thereby improving productivity, and strengthening integration of smallholders into the agricultural value chain.