Kenyan farmers receive tailor-made financial support from Equity Bank to boost productivity

KENYA – Equity Bank, a Kenyan financial service holding company has launched a farm inputs subsidy programme dubbed Kenya Cereal Enhancement Programme – Climate-Resilient Agricultural Livelihoods Window (KCEP-CRAL).

Despite many Kenyan households in rural parts of the country still relying on farming as a source of livelihood, the high cost of farm inputs has played a prohibitive role in the adoption of agribusiness by farmers.

The programme aims at supporting smallholder farmers to increase productivity and profitability of cereal production by ensuring their access of farm inputs, value chain financing, linkage to markets, post-harvest management and investments in interventions that build resilience to climate change and sustainable natural resources management.

Equity Group Managing Director and CEO Dr James Mwangi notes that the bank’s role as an implementing partner aligns with its core values of creativity and innovation.

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The scheme is being implemented in partnership with the Government of Kenya, the European Union, and the International Fund for Agricultural Development (IFAD).

Through the programme, Equity has so far disbursed Ksh 1.65 billion (US$14.94m) to 71,073 farmers to enable them to purchase farm inputs.

These loans are tied to wallets that can only be redeemed at one of the 364 pre-qualified agro-dealer outlets.

For instance, if a farmer took a loan of Ksh 20,000 (US$181), that money will be deposited into their e-wallets and they have specific limits that they can spend on different kinds of inputs e.g Ksh 2,000 (US$18) on equipment, Ksh 5,000 (US$45) on fertilizer, Ksh 8,000 (US$72) on seeds and so on until the entire amount is exhausted.

This means that farmers under this scheme cannot get loans for one thing and spend the money on things it was not intended for.

The loans are insured, thereby protecting farmers from losses they may incur due to poor harvests resulting from unforeseen occurrences like drought, too much rainfall or pest infestations.

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In addition to financing, the farmers benefit from financial literacy training and agricultural extension services where the progress of their farms are monitored and appropriate technical advice given by agricultural officers.

The bank initially operated a debit card-based, electronic platform (e-voucher) since the year 2016 but as a response to the Covid-19 pandemic, it developed and deployed a mobile banking-based e-voucher system dubbed KCEP-CRAL Plus. The contactless solution has been an innovative model to curb the spread of the novel corona virus.

Equity offers additional training on financial education and entrepreneurship to the farmers and agro-dealers.

Farmers get to appreciate the need to plan their yield for consumption at home, and how much to sell to raise cash, or how much to store.

Agro-dealers on the other hand are equipped with better entrepreneurship and financial management skills that help them scale their businesses.

This agribusiness approach to farming facilitates income generation for re-investment in agriculture and ensures they have a sustainable income.

 This training and exposure to financial systems also allow financially excluded farmers to enjoy the benefits of banking.

“In the long-term, farmers have the opportunity to approach financial institutions, have their land assessed and access credit facilities. This ensures they have sustainable farms that can self-finance on their merit,” says Moses Abukari, IFAD Regional Programme Manager.

The programme is currently being implemented in five counties in Western Kenya.

The financial institution has invested heavily in interventions in agriculture and continues to engage with partners to improve the lives and livelihoods of all players on the entire agriculture value chain.

Earlier this year, Equity has received financing worth EUR 120 million (US$144m) from the European Union and the European Investment Bank, to enable it provide liquidity to Kenya’s small and medium-sized enterprises (SMEs), including the agriculture sector.

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