Kenya Bankers Association (KBA) has entered a partnership with Germany-based GIZ for Small Micro and Medium Enterprises (SME) financing in agriculture at an undisclosed amount.
The deal will ease capacity building among lenders while aiding them to gain deeper insights on specific green technology financing, with a view to enabling them to develop tailor-made products.
KBA Chief Executive Dr. Habil Olaka said the partnership was intended to create awareness among the public and private sector stakeholders to enable a functioning market for green and digital technologies in Kenya.
Small scale farmers have been challenged to establish businesses that are bankable with Dr. Olaka calling on banks and other financial institutions to support agri-businesses in the country.
Speaking during the signing of the SIF, Armin Kloeckner, Head of the Agriculture Programme at GIZ noted the significance of agricultural finance was eliminating hunger and boosting prosperity.
“The Sustainable Finance Initiative (SFI) provides an excellent platform to demonstrate the potential of green technologies for both the agriculture and the finance sectors,” stated Kloeckner.
KBA plans on establishing several e-learnings under the SIF learning platform with support from the Water and Energy for Food (WE4F) program, with support from the Digital Transformation Centre, the Water and Energy for Food (WE4F) programme and SDG Market Building Project which is funded by the German Government and implemented by GIZ, for training sessions.
Besides the training, the partners will ensure that green and digital investment projects with suitable products offered by KBA member banks, also address the challenges agribusinesses face in accessing bank loans.
According to a 2018 KBA report titled ‘Realization of Full Potential of the Agriculture Sector’, commercial lending to the Agricultural sector remains low, accounting for a four percent of the total lending portfolios.
Agriculture has remained a mainstay of the country’s economy with a direct contribution of 26 percent of total Gross Domestic Product (GDP).