KENYA – The International Finance Corporation (IFC), the largest global development institution focused on the private sector in developing countries, has entered into a Sh237.5 million ($1.9 million) deal with Kenya’s Warehouse Receipt System Council (WRSC).
In the set deal, IFC is helping mobilize private sector investment into the recently established system and offering technical advisory services to WRSC.
The Warehouse Receipt System (WRS) allows farmers to hold their products in certified warehouses where the product can be tested, cleaned, graded, and stored with the owners of the commodity, receiving a receipt as proof of ownership.
Kenya formally launched its WRS in January 2022, two-and-a-half years after Parliament passed The Warehouse Receipt System Act, which provides the legal and regulatory framework backing the WRS and the council.
Recently, WRSC licensed the private warehouses of AFEX Fair Trade Kenya, a subsidiary of Nigeria’s commodities exchange and commodities market player, AFEX Fair Trade Limited (AFTL), under the new receipt system, becoming the first private company in Kenya.
According to Business Daily, the IFC said in disclosures published last week that the three-year advisory program, which will run until August 2025, will also involve the education of farmers on the benefits of utilizing certified warehouses for crop storage to minimize post-harvest losses and get better prices for their produce.
“Together with the Government of Kenya and the private sector, IFC will identify a pipeline of bankable investments in the warehousing value chain, including support to product development and investment into warehousing infrastructure, banking products, insurance, and collateral management,” said the IFC in the advisory support disclosure.
The IFC is expected to provide institutional support for the council and the implementation of the regulations, giving clarity on warehouse receipts, the legal status of warehouse receipts, rights and obligations of warehouse operators and banks and structure of warehouse receipts regulatory body, guarantee performance and minimize fees and cost of regulation.
Additionally, IFC will support the development of operational guidelines for a model of supervised private warehouse operations – these guidelines will focus on warehouse quality, and warehouse operations including inspections, grading, and commodities standards.
According to Knight Frank Kenya CEO Mark Dunford, Kenya still has a low supply of warehousing facilities despite increased demand for storage and distribution spaces brought about by a surge in e-commerce.
He noted that the lack of storage facilities has seen Kenya become a net food importer, amusing to other countries, since the East African region is known as an agricultural economy.
Citing the latest Knight Frank Kenya Market Update, Capital Business said the warehousing facilities currently available in Kenya are outdated and do not meet the threshold standards for modern warehouses.
“There is a rising demand for quality industrial facilities (Grade A) in the country to fill this gap,” the update notes.