AGRA pushes banks to increase lending to farmers

Commercial banks have been urged to increase their lending to the agricultural sector.

According to Kenya Commercial Bank (KCB), only three percent of loans issued by banks are channeled to the agricultural sector.

KCB Retail Director Annastacia Kimtai said lending without security has always been a challenge but it is important for lenders to look at farming as a commercial entity.

“If you look at the contribution from agriculture 70 percent of the livelihoods derive their daily income, feed the country, yet if you come to the financial institutions 3 percent of the lending is being channeled through agriculture,” said Ms Kimtai.

Ms Kimtai said farmers face difficulties in accessing credit since most financial institutions disburse loans depending on credit history further limiting food production.

According to the president Alliance for a Green Revolution in Africa (AGRA), Agnes Kalibata, inadequate credit supply to farmers, is one of the key factors to curbing food insecurity since the farmers have the preferred farming ability.

“Today our food import bill on the continent is Sh40 billion. This is Sh40 billion that we are exporting into jobs for other people. This is Sh40 billion that we could be using to get those farmers out of poverty so that they become part of mainstream economy,” Ms Kalibata said.

AGRA says that the right factors which include policies, politics, research and technology need to be given priority in order to achieve full harvest potential in the country.

Aside limited access to finances, small scale farmers in Kenya have to deal with poor infrastructure, pests and disease as well as unpredictable rain patterns.

In June, the Kenya Revenue Authority (KRA) stated that it was set to tax small-scale commercial farmers whose average monthly income is above Sh11, 180 in a bid to meet its revenue target.

The Kenyan agricultural sector contributes 30 percent of the Gross Domestic Product and offers 75 percent employment especially for small holder farmers.

The two were speaking during the signing of a Sh10 million partnership agreement for the upcoming African Green Revolution Forum (AGRF) to be held in Nairobi from September 5 to 9.