Equity gives a boost on Agribusiness with provision of tailor-made financing for small-scale farmers

Many Kenyan households in rural parts of the country still rely on farming as a source of livelihood; most of this is subsistence. The high cost of farm inputs has played a prohibitive role in the adoption of agribusiness by farmers.

It is against this backdrop that Equity has been implementing a farm inputs subsidy programme dubbed Kenya Cereal Enhancement Programme – Climate-Resilient Agricultural Livelihoods Window (KCEP-CRAL). The scheme is being implemented in partnership with the Government of Kenya, the European Union, and the International Fund for Agricultural Development (IFAD).

The programme aims at supporting smallholder farmers to increase productivity and profitability of cereal production by ensuring that targeted smallholder farmers access 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 Equity’s role as an implementing partner aligns with the bank’s core values of creativity and innovation. The bank 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.

Through the programme, Equity has so far disbursed KES 1.65 billion to 71,073 farmers to enable them to purchase farm inputs. What’s different about these loans is that they 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 KES 20,000, 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 KES 2,000 on equipment, KES 5,000 on fertilizer, KES 8,000 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.

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.

Among beneficiaries of KCEP-CRAL Plus is Resy Airo from Bungoma County. Resy joined the programme in 2016 where she received a subsidy of 80%. Her farming yields grew and she was already being weaned out of the programme receiving a reduced subsidy of 60% before the Covid-19 pandemic struck. Resy has been able to meet her family’s financial needs as well as build a house from her farming proceeds.

“When I joined the programme we were using cards but with the introduction of mobile e-vouchers, I don’t have to deal with cash. I feel safer against COVID-19 because nothing is touched in the transaction between the agro-dealer and I,” says Resy.

Bildad Wasilwa is a first-timer in the programme. The young farmer ventured into agribusiness after his hardware business closed down due to the effects of lockdowns and restrictions occasioned by the Covid-19 pandemic. As he collects his seeds and fertilizer from the agro-dealer, he is optimistic about a good harvest.

“I like the fact that we are transacting with the mobile phone. There is no touching or exchanging anything,” he says. “My parents are farmers and I know that agribusiness has great potential. I believe that if I apply the knowledge gained from extension officers, my farm will be profitable.”

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 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 and interested farmers can visit their nearest Equity Bank branches for more information or sign up.