In a significant stride towards bolstering Kenya’s agricultural landscape, the Agricultural Finance Corporation (AFC) has launched its Strategic Plan for 2023-2027.
AFC’s strategic plan aims to tackle the myriad challenges facing the agricultural sector, such as inadequate financing, insufficient infrastructure, and the impacts of climate change, which collectively impede farmers’ productivity and profitability.
Agriculture Finance Corporation Managing Director George Kubai said the plan emphasizes increasing access to affordable credit, particularly for smallholder farmers, youth, and women, empowering them to invest in critical resources, manage risks, and adopt modern technologies.
“With this Strategic Plan 2023-2027 we aim to significantly address these challenges by providing solutions that will help our farmers thrive. Therefore, the plan we are launching today is a seed, a promise of sustenance, and the foundation for a thriving agricultural sector” said Kubai
Speaking during the launch of Strategic Plan Principal Secretary State Department of Livestock Development Hon. Jonathan Mueke said the strategy is anchored in eight key pillars, which include financing agri-food value chains, promoting climate-smart agriculture, and enhancing governance structures within AFC.
“This comprehensive approach underscores AFC’s commitment to financial inclusion and sustainable growth within the agricultural sector. Notably, the introduction of innovative financial products like Asset Finance and Open-Line Agribusiness signifies AFC’s dedication to addressing the diverse needs of Kenyan farmers” said Mueke
“A substantial allocation of KSh1 billion from the Kenyan government and an additional KSh15 billion from Afriexim Bank, AFC is well-positioned to transform the agricultural landscape in Kenya. The Indian Exim Bank has also pledged support, particularly in the area of agricultural mechanization, further highlighting the collaborative efforts to drive agricultural growth and sustainability in the country” he added
FSD Kenya, a key partner in this initiative, reaffirmed its commitment to supporting AFC’s strategic plan. FSD Kenya’s involvement with AFC dates back to 2017, when the National Treasury sought their expertise to evaluate the feasibility of transforming AFC into a farmers’ bank. The recommendation was for AFC to pivot into a market maker rather than converting into a bank. This led to the development of AFC’s transformation strategy for 2018-2022, which laid the groundwork for the current plan.
During the event, FSD Kenya underscored the importance of continuous business model innovation for AFC to effectively overcome the challenges faced by the agricultural sector. They highlighted that the strategic plan for 2023-2027 builds upon previous efforts and aligns with the Bottom-up Economic Transformation Agenda (BETA) and the Medium-Term Plan IV. These frameworks aim to modernize and commercialize Kenya’s agricultural sector, ensuring its sustainability and growth.
Data from the 2021 FinAccess survey was cited, revealing a decline in farming as a livelihood from 33 percent in 2016 to 18 percent in 2021, with farmers experiencing lower-than-average financial health. This alarming trend underscores the urgent need for interventions to prevent food insecurity in a country heavily reliant on smallholder farmers. AFC’s strategic plan is poised to play a crucial role in reversing this trend by fostering financial health and sustainability in the sector.
FSD Kenya committed to providing technical and de-risking support to AFC in various areas, including reviewing existing business models, developing innovative financing models leveraging digital technologies, and establishing frameworks for partnerships and collaborations. Additionally, FSD Kenya will continue supporting the design and implementation of a Warehouse Receipt System Finance solution, aimed at reducing post-harvest losses and enhancing liquidity for smallholder farmers, particularly women.
Moreover, FSD Kenya is exploring potential partnerships with AFC under the RK-FINFA project, which includes institutional appraisal of AFC, capacity assessment for hosting a green finance facility, and the development of taxonomies for green investments.
In conclusion, FSD Kenya expressed confidence that AFC’s strategic plan will significantly enhance its portfolio performance, impact, and sustainability. By partnering with private sector players and providing public-backed capital and risk mitigation tools, AFC aims to incentivize increased investments in agricultural value chains, ultimately benefiting smallholder farmers in Kenya. This collaborative effort promises a thriving future for Kenyan agriculture, fostering economic growth and rural prosperity.