Why funding is key in unlocking farming potential
Two men use bicycles to transport their crop harvests to the market. It is disheartening that lending institutions easily give loans to real-estate investors but find it hard to offer the services to farmers. FILE PHOTO | NATION MEDIA GROUP
What you need to know:
- It is disheartening that lending institutions easily give loans to real-estate investors but find it hard to offer the services to farmers.
- But lack of finance is the key impediment to investors’ participation in agribusiness, according to recently released government report.
- Youth unemployment and the myriad ideas for agribusiness, which range from livestock to vegetable farming, have pushed the need for funding.
- Some organisations have also taken advantage of the gap and designed special equipment to serve rural households.
Agriculture continues to play a vital role in Kenya’s rural economy.
Eighty per cent of Kenyans derive their livelihoods from farming even as average landholding continues to shrink. Kenya’s average farm size is less than 2.5 hectares.
A powerful route to the economic growth for smallholder farmers is access to productive agricultural assets.
Yet 36 per cent of rural Kenyans have no access to any form of financial services.
Both public and private sectors need to invest in this field, which is the surest way of providing jobs to young Kenyans.
It is disheartening that lending institutions easily give loans to real-estate investors but find it hard to offer the services to farmers.
Middlemen, climate change and low investment in agriculture contribute much to what impedes the industry’s full potential and fear by financial institutions to fund it.
Post-harvest losses, poor farming inputs, pests and diseases are the other challenges facing agriculture.
But lack of finance is the key impediment to investors’ participation in agribusiness, according to recently released government report.
PROMOTING INNOVATION
Non profitmaking organisations working in the industry have returned the same verdict.
Youth unemployment and the myriad ideas for agribusiness, which range from livestock to vegetable farming, have pushed the need for funding.
To be fair, many lending institutions have designed special funding programmes for farmers.
Some organisations have also taken advantage of the gap and designed special equipment to serve rural households.
One of these institutions is Juhudi Kilimo, which has for the last 10 years been financing agribusiness projects.
The institution provides start-up capital as a way of promoting innovation.
“Juhudi Kilimo aims to improve the lives of nearly 500,000 rural Kenyans. With more than 28 branches in 19 counties, the company has defied the widely held perception that lending to smallholder farmers is risky,” Juhudi CEO Bernard Kivuva says.
He adds that more than 162,460 livelihoods have directly or indirectly gained from Juhudi Kilimo innovative products and services. They include farm, crop farming, start-up business and clean energy loans.
The organisation also provides business management, technical and financial literacy training to rural smallholder farmers and micro entrepreneurs.
