KENYA – The Agricultural Finance Corporation (AFC), a wholly owned government Development Finance Institution (DFI) in Kenya, is seeking to transform into a fully-fledged commercial bank in a bid to serve the agricultural value chain players better and fulfil its key role of stimulating investment through the sector.
According to the corporation, the new institution will be modelled around the success stories of agricultural banks in countries such as India, Malaysia, Thailand and China.
The Board Chairman of AFC, Franklin Bett stated that the transformational plans are at an advanced stage but it’s likely to face delays due to legislative and institutional processes.
He explained that crucial policies and laws need to be enacted by the National Assembly. “The parastatal further requires injection of requisite capital to compete in the financial services sector,” he added.
The transformation of AFC to a bank is to be actualised in its short-term strategy. This was revealed as the AFC was has inaugurating its new Board of Directors.
The appointment gives a fresh impetus to the ongoing transformation exercise that recognises AFC’s key role in stimulating investment through agriculture.
The Corporation has prioritized its efforts and resources towards driving financial inclusion in the agricultural sector to reach excluded segments of the population that have previously been unable to access its products and services.
In this regard, the Corporation is building partnerships whose outcome is more responsive and inclusive models of service delivery, especially to women and youth.
To this end the African Development Bank (AfDB) has committed Ksh. 1.9 billion (US$17.5bn) in support of youth initiatives in the country. The funds will be hosted at AFC and will go towards lending to youth agripreneurs.
In addition, the Corporation is in advanced discussions with the Arab Bank of Economic Development in Africa (BADEA) for a facility to operationalise AFC’s Islamic Finance Window.
AFC is also collaborating with a number of USAID funded programs in the country. These include the Kenya Investment mechanism, the Kenya Crops and Dairy Market Systems and the Livestock Market Systems project, through which the Corporation is leveraging an additional Ksh. 1.2 billion (US$11.1m) to Kenya farmers.
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