Nairobi: Agricultural Finance Corporation (AFC) has this year, through its revolving fund, so far disbursed over Sh 3.5 billion to smallholder farmers. AFC is a state-owned development finance institution with a history spanning close to a century and supports the development of the agricultural sector by providing accessible and affordable financial services, which include asset-backed financing, warehouse receipt financing, and also Digital Financing.
According to Kenya News Agency, Managing Director of AFC, George Kubai, stated that they have enabled smallholder farmers, who typically face challenges in accessing loans due to a lack of collateral, to secure credit through Micro Finance Institutions (MFIs) and SACCOs using a co-guaranteeing model. This model has allowed AFC to penetrate markets and reach out to smallholder farmers, offering loans as low as Sh 5,000.
Kubai, speaking at the ongoing Financing Agri-food Systems Sustainability (FINAS) Summit in Nairobi, noted that while they have disbursed a substantial amount, their annual target is Sh 4.5 billion, and they aim to disburse an additional Sh 500 million by the end of the financial year. He also mentioned that AFC's Non-Performing Loans (NPL) rate is favorable, averaging around 14 percent, which aligns with other development financial institutions.
Kubai highlighted AFC's collaboration with the Ministry of Agriculture and Livestock Development on the Enable Youth program, aimed at fostering entrepreneurship in agribusiness through training, skill acquisition, and creating an enabling environment for youth to establish profitable ventures. The program, co-funded by the African Development Bank (AfDB) and the Government of Kenya, has provided capacity building and loans to over 262 youths, totaling Sh 259 million.
AFC is also focusing on financial inclusion for youth and women, working with development partners to de-risk these groups and ensure their access to financial services. Kubai emphasized that women form a significant part of AFC's portfolio, noting their reliability as borrowers, and have introduced a women-only financial product.
He revealed that AFC's largest loan portfolios are in the dairy and livestock sectors, particularly in regions like the North Rift, South Rift, and Mount Kenya, where dairy farming is prevalent. Kubai appealed to farmers with outstanding loans to fulfill their obligations to enable other farmers to access financial support.
Director of Food Systems Coordination at the International Fund for Agricultural Development (IFAD), Nadine Gbossa, stressed the importance of financing food systems to ensure decent incomes and livelihoods for workers in the agri-food sector. She called for African governments to be equipped with data intelligence on food system financing to complement domestic funding.
The three-day FINAS meeting is focused on building sustainable agri-food systems in Africa, emphasizing the need for strategic investment and sustainable financing to nourish future generations.