State, Equity Bank sign Sh300m to shield farmers from crop loss
The government has signed a Sh300 million agreement with Equity Bank to cushion farmers against crop failure.
Agriculture CS Willy Bett said the partnership is a risk-sharing arrangement between the government and the financial institution. “The government provides a guarantee fund to cushion financial institutions for any proven credit loss at 10 per cent of the outstanding credit amount in default. The ministry will support the process by providing policy guidance, mobilise and strengthen farmers’ groups and monitor scheme performance as well as do follow-ups,” he said.
Bett said the recalled interest will be used for farmers capacity building and affirmative action for the disadvantaged.
He spoke on Tuesday at Kilimo House, when he signed an agricultural credit guarantee scheme agreement with Equity Bank.
Equity Bank chief executive officer James Mwangi said 472,632 individuals and 78,772 households have benefitted since 2008 through the Kilimo Biashara loans. “More than Sh7 billion has been disbursed through the Kilimo Biashara partnership from which lessons have been used across the continent due to its impact on farming and related businesses,” he said.
Mwangi said issues of risks in agriculture financing remain critical, as witnessed in the last two years, particularly due to climate change and the recent disaster of fall armyworm. On average, agriculture disburses approximately Sh8.4 billion per year to approximately 83,000 loan beneficiaries.
The agriculture portfolio distribution by value, according to the Equity boss, is at 43.9 per cent for coffee and tea, 36.1 per cent for potatoes, cereals and legumes.
Horticulture is at six per cent, beef, poultry and pork at 8.4 per cent, dairy at 3.7 per cent, agriculture asset financing at 0.8 per cent and others, including agro-forestry, at one per cent. “The need to address these challenges still requires stakeholders to take the innovation spirit a notch higher,” Mwangi said.