Agricultural Finance Corporation and Feed the Future Kenya Crops and Dairy Market Systems Activity Co-financing mechanism

Product description

Feed the future Kenya Crops and Dairy Market Systems (KCDMS) Activity is a five-year (Oct 2017– Sept 2022) program of the United States Agency for International Development (USAID). It is funded as part of Feed the Future, the U.S. Government’s global hunger, and food security initiative that helps to increase agricultural production and reduce poverty and malnutrition in Kenya. The KCDMS activity is being implemented in twelve counties (Kitui, Makueni, Taita Taveta, Homa Bay, Migori, Kisii, Kisumu, Siaya, Kakamega, Bungoma, Busia, and Vihiga) and is designed to spur competitive, resilient market systems in Kenya’s horticulture and dairy sectors. The Agricultural Finance Corporation (AFC), a Government owned Development Finance Institution (DFI) has a mandate to develop agriculture and agricultural sector in Kenya through provision of credit. AFC operates 46 branches in Kenya. AFC has been lending to the agriculture sector since 1963 and has renewed its funding commitment for the sector with increased allocations for financing horticulture and dairy. AFC and KCDMS have entered into a partnership with an intention of facilitating agri-finance in the counties of mutual interest to agricultural and agriculture Micro, Small Medium (MSMEs) and large enterprises. To facilitate this, the two organizations have devised a co-funding mechanism for agricultural enterprises. The mechanism targets high impact enterprises to the agribusiness sector within the zones of common interest

  • ? Financing is a critical ingredient to fuel investment at the farm and off-farm levels ? Commercial funds are the most available source of finance for agribusiness investors ? Access to these funds, specifically credit is constrained by a range of factors. ? The factors include but not limited to: Collateral, capacity of actors to service debts, availability of flexible and customized facilities and value chain structure (market factors). ? KCDMS has devised a cocktail of pathways that involve financial capital providers ? KCDMS has partnered with Financial institutions such as Banks, DFIs, MFIs and SACCOs with an intention of increasing demand and supply of finance to the sector in its Zone of influence ? The activity is facilitating linkages between enterprises and financial institutions and vice versa
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