Kshs 3.2 billion credit facility for low-income farmers launched
Written By:PPS , Posted: Tue, May 06, 2008
President Mwai Kibaki Tuesday launched a Kshs 3.2 billion credit facility, dubbed Kilimo Biashara Partnership, geared towards providing affordable credit to low income farmers in the country and building business capacity in the sector
Speaking at the launch at a Nairobi hotel, President Kibaki said his Government was addressing the challenges facing farmers in their efforts to expand their farming activities.
“Our farmers, and particularly the small-scale producers, are hardworking, but their efforts are continuously being frustrated by inadequate resources to buy fertilizers and other inputs that will enable them to increase productivity and improve their incomes,” President Kibaki said.
He thanked the Alliance for the Green Revolution in Africa (AGRA), the Equity Bank and the International Fund for Agricultural Development (IFAD) for providing 2.5 million U.S. dollars each as guarantee funds for the credit facility.
Citing the example of the Kilimo Plus arrangement, the President said under the initiative, the Government was providing free seeds, fertilizers and training to poor farmers to enable them increase production and sell the surplus to enhance their income base.
He expressed satisfaction that about 48,000 farmers benefited from this initiative last year.
Said the President: “The initiative is therefore expected to make a major contribution towards efforts to eradicate absolute poverty.”
Noting that the credit requirements for the agricultural sector, currently estimated at well over 60 billion shillings, were enormous, the President said the Kshs 3.2 billion being provided under the Kilimo Biashara Partnership was significant as it targeted low-income farmers.
He said the arrangements would cushion farmers from the effects of high interest rates and urged them to put the loans into good use and honour their repayment commitments so that other farmers could have access to the loans in future.
President Kibaki, at the same time, said his Government has undertaken a wide range of measures to improve the performance of the agricultural sector to mitigate the devastating effects of the high cost of basic foods as a result of escalating fuel prices, high cost of agricultural inputs and rapidly growing demand for cereals for use in bio-fuel production was having on Kenyans.
The President said among the key measures the Government has taken is the provision of affordable credit to farmers, pointing out that by 31st December last year, a total of 25,000 farmers were awarded loans totaling to over 3 billion shillings under the seasonal credit loans scheme.
The Head of State added that a further 2 billion shillings was disbursed under the enterprise loans scheme.
To augment these efforts and to ensure that key crop commodities have a sustainable source of development credit, President Kibaki said the Government will increase the Sugar Development Fund from the current 3.2 billion shillings to 4 billion shillings and the Coffee Development Fund from the current 750 million shillings to 2 billion shillings in the next two years.
He said the Government would also continue to establish commodity-specific funds to increase access to credit for farmers and agro-dealers.
“Beyond the provision of credit, we have revived farmers’ institutions that had collapsed due to years of mismanagement,” President Kibaki said.
In addition, the President said his Government has strengthened the capacity of the agricultural extension services by employing new technical staff and providing them with transport and other facilities so that they can reach more farmers.
He said the Government has over the last four years more than doubled the budgetary allocation to the agricultural sector from 13 billion shillings in 2002 to 29 billion shillings in 2007, noting that these efforts, coupled with the hard work of farmers, have gone a long way towards revitalizing the performance of the agricultural sector.
Said the President: “Indeed, since 2004, the sector has achieved an average growth rate of 6.2 percent, which is the highest growth rate achieved over the last 3 decades.”
The President, however, regretted that while the agricultural sector has made tremendous strides, the post-election disturbances created major setbacks, as thousands of farmers were displaced from their farms and could not therefore engage in normal farming activities.
In this regard, President Kibaki said in order to address these challenges, the Government is ploughing land for free for internally displaced people and low income farmers in the affected areas.
He said the Government was also providing free seeds and fertilizer to internally displaced farmers who are returning to their farms and has beefed up extension services to educate farmers on innovative ways of fertilizer application.
“These are some of the short-term measures to ensure that the farming situation returns to normal. I am glad to note that the resettlement programme has already kicked-off, and is going on well,” President Kibaki said.
The President appealed to all concerned to give peace a chance and encouraged the neighbours who have co-existed well for years to accommodate each other and live together in the true spirit of reconciliation.
He added that it was imperative that extra efforts are marshaled for the agricultural sector to recover and regain the momentum that it had picked by last year.
To reduce and manage the cost of farm inputs, the President directed the Ministry of Agriculture to come up with interventions that will ensure that prices of fertilizer and seeds are affordable to low income farmers.
He asked the Ministry of Local Government in conjunction with the Ministry of Agriculture to expand the wholesale fresh produce marketing infrastructure in Nairobi, Mombasa, Kisumu, Nakuru and other urban centres to provide farmers with reliable markets and marketing infrastructure for them to sell their produce.
Expressing the need to also develop proper market infrastructure in the rural areas, President Kibaki said there should be a proper market in every district headquarters.
With regard to national food security, the President directed the Ministry of Agriculture in collaboration with the Ministry of Finance to allocate more funds so as to increase the Strategic Grain Reserve from the current 4 million bags or one and half months of the national requirement to 8 million bags or three months of the national requirement over the next two years.
Noting that the Kilimo Biashara Partnership was the first of its kind in the country, President Kibaki called on more development partners and other banks to emulate this example and establish similar partnerships through which farmers could access affordable credit and asked the Ministry of Agriculture in consultation with the Ministry of Finance to allocate more funds for expansion of this type of product.
Other speakers included Prime Minister Raila Odinga and Agriculture Minister William Ruto among others.