Over 70,000 farmers receive Ksh1B from AFC’s credit scheme for women


By Sacco Review reporter

Over 70,000 farmers have benefited from loans worth Ksh 1 billion since the inception of the Agricultural Finance Corporation’s (AFC) cheap credit scheme in 2018 that targets to benefit women on agri-finance in Kenya.

The money was accessed through Saccos, microfinance institutions and Micro, Small and Medium Enterprises (MSMEs)  with AFC projecting to reach out to more than 300,000 small holder farmers in the next three years and lend over Ksh3 billion.

Through the Programme for Rural Outreach of Financial Innovations and Technologies (PROFITs) Risk Sharing Facility (RSF), AFC received a cash guarantee of about Ksh 400 million.

The scheme, dubbed the Women Affirmative Action Window (WAAW), was introduced to mitigate the challenges that most women experience while practicing agriculture.

Some of the challenges include inadequate land ownership, lack of access to agricultural inputs and technology, lack of access to business development and extension services and few markets for agricultural produce.

The use of land as collaterals and the high cost of accessing credit are the major reasons that prompted the Development Finance Institution (DFI) and the Agricultural Finance Corporation (AFC) to introduce cheaper credit schemes to support women in agriculture.

Through the years, AFC has been issuing loans using ‘hard’ collaterals, notably title deeds, in an effort to safeguard the tax payer’s investment.

According to AFC, the move saw only 5 per cent of the loans being received by women. As a result, the state organ has to rethink of the better ways of empowering women in order to include them in agri-finance in Kenya.

Their decision was backed by the fact that women play a vital role in the agricultural sector as key producers of the country’s food and are important value chain actors in the rural economy despite the challenges they face.

AFC notes that the design of the WAAW concept proposes a good practical beginning of a long journey towards more lasting solutions in addressing the inadequate financing of women in agribusiness.

Through simple instruments of Risk sharing Facility and Technical Assistance, AFC received credit that guaranteed only 50 per cent of the booked portfolio to be open to non-traditional collateral like bank guarantees, debentures and non-Title assets among others.

Through the programme, rural women will be able to take advantage of emerging green economic opportunities in new crops, technologies including digital finance and markets while employed women will be able to venture into commercial agriculture as they transition to retirement.

The initiative has brought renewed attention to the important role of women in agricultural value chains and is designed to facilitate outreach to women, enhance food security, improve the economic and social development of Kenyan households and hasten the realization of the Big Four Agenda with women playing a significant role.

The model envisions aggressive promotion of alternative collaterals like use of contracts, third party guarantee mechanisms, provision of affordable credit, more inclusive cash flow aligned credit products, long term products to buy assets, grow tree crops capacity building, and access to markets.

The Corporation through the model utilizes alternative collaterals including market contract, check-off system, character based- relationships, credit guarantees among others to replace/compliment hard collateral as is traditionally used; and also enhance financial inclusion of the previously financially excluded segments mainly women and youth.

The agricultural sector is vital to Kenya’s economic development. In 2016, the sector contributed 29.4 per cent to Kenya’s GDP. The sector contributes a further 26 per cent or more through linkages to other sectors.

The sector also plays a crucial role in employment creation as it employs over 40 per cent of the total population and over 70 per cent of the rural population who are mostly women.

The focus of the initiative is to have more women included through adaptation to more innovative collaterals, more efficient delivery models and channels and reduction of the cost of credit and granting loans in amounts suited to women, many of who shall be micro borrowers.

AFC is mandated to supporting the development of agriculture and agricultural industries by making loans, and providing managerial and technical assistance to the loan beneficiaries; the mandate that covers agriculture, rural development and food security.

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