The International Agricultural Development Fund (IFAD) has established a Sh19.7 billion fund in partnership with the government of Kenya to improve access to finance for smallholder farmers.

Development Diaries reports that 190,000 rural Kenyan households are set to benefit from the fund directly or indirectly.

The facility, it is understood, will feature a rural credit guarantee system that will help reduce the perceived and real risks associated with agricultural value chain lending.

There are more than 7.5 million smallholder farmers in Kenya, accounting for about 75 percent of the country’s total agricultural output.

Kenya’s agriculture sector employs 71 percent of the rural population and accounts for about 69.7 percent of export earnings.

Despite their importance to Kenya’s food security, smallholder farmers lack basic inputs such as fertiliser, seeds, tools, and the knowledge provided by agricultural extension services to increase their yields.

According to the Principal Secretary to the National Treasury and Economic Planning, Chris Kiptoo, the Kenya Rural Financial Inclusion Facility Project (RK-FINFA) will mobilise resources from private financial institutions and partner development institutions for allocation to the agricultural sector.

‘This will lead to an increase in financial resources at the bottom of the development pyramid while strengthening the climate change resilience of actors in the agricultural value chain’, Kiptoo said.

For his part, IFAD Country Director and Representative for Kenya, Mariatu Kamara, said the facility will provide technical assistance to agricultural value chain players to help them improve their production, marketing, and various other business practices.

Photo source: IWMI