The Agricultural Finance Corporation (AFC) is spearheading a new era in agricultural financing with the launch of warehouse receipt financing, a product that aims to empower Kenyan farmers by providing them with access to credit against stored commodities. Speaking at the Warehouse Receipt Financing Feasibility Study Dissemination Workshop, George Kubai, AFC’s Managing Director, emphasized the transformative potential of this initiative.
“Warehouse receipt financing has the potential to revolutionize agricultural financing in Kenya by enabling farmers to access credit against stored commodities, thereby easing the burden of post-harvest losses and offering them better bargaining power,” said Kubai. He further noted that for this product to be successful, it must be designed with a comprehensive understanding of the realities faced by farmers, the capacities of financial institutions, and the regulatory and environmental factors influencing Kenya’s agricultural sector.
The workshop, hosted by Financial Sector Deepening (FSD) Kenya in partnership with the Warehouse Receipt System Council (WRSC) and the Alliance for a Green Revolution in Africa (AGRA), served as a platform to disseminate key findings from a recent feasibility study on warehouse receipt financing in the country. Participants delved into discussions on the demand-side, supply-side, and environmental factors that will shape the future of this financing solution.
Kubai underscored AFC’s commitment to enhancing financial inclusion and supporting smallholder farmers through innovative products tailored to their needs. “Our strategic goals are focused on revolutionizing agricultural financing in this country,” he stated. “Warehouse receipt financing is a pivotal component of this strategy, and we believe it will play a critical role in supporting Kenya’s agricultural sector.”
With post-harvest losses continuing to plague smallholder farmers and limiting their ability to secure fair prices for their produce, warehouse receipt financing could offer a solution by allowing them to store their commodities in certified warehouses and access credit in the meantime. This approach is expected to reduce pressure on farmers to sell their crops immediately after harvest, when prices are typically low.
As AFC, FSD Kenya, WRSC, and AGRA continue to collaborate on this initiative, stakeholders across the agricultural and financial sectors are optimistic about the potential impact of warehouse receipt financing on improving agricultural productivity and sustainability in Kenya.
