Equity Group would manage the Sh6bn EU agro-processing loan scheme
The European Union on Wednesday unveiled a Sh6.62 billion package for onward lending to farmers and agro-processors servicing demand-driven contracts.
European Union delegation to Kenya Charge’ d’Affairs Walter Tretton said Sh5.7 billion will be lent out on a long-tenure basis of seven years on a collateral-free basis and will be managed by Equity Group .
A further Sh962 million is to be dished out in two equal halves, one as a loan managed by Equity Bank and another as a grant to be given to successful applicants by the facilitator Self Help Africa.
This means fresh produce suppliers to local retail chains as well as agro-processors handling export contracts will have activities reviewed together with their financial history to determine their worth when applying for the loans.
Speaking in Nairobi, Equity Group (Kenya) managing director Polycarp Igathe said this will unlock farmers’ potential to meet market demand in volume and quality while enabling farmers directly link up with retail chains. This will help eliminate brokers from the value chain.
“Farmers have to demonstrate ability to grow crops, access to a guaranteed ready-market and proof of commercial farming earnings. We have employed a director of agriculture to lead our agricultural team of experts that will directly engage farmers offering technical assistance from farm husbandry to marketing,” he said.
The engagement with the lender will help formulation of homegrown solutions to financing agriculture with farmers actively involved in the process of creating products that address needs for affordable capital.
“EIB’s injection of funds directly to the private sector (farmers) via Equity Group informs the importance of agriculture as a commercial enterprise. Smallholder farmers do not want handouts but affordable loans as well as technical assistance that makes them resilient,” he said.
EIB regional representative for East Africa Catherine Collin said the facility aims to strengthen the agro-processor-smallholder relationship helping increase fresh produce production as well as enhance fresh produce quality to meet market demands and standards.
Last year, horticultural farmers earned farmers Sh124.2 billion for exporting 497,000 tonnes of fresh produce.