AFC SIGNS A MOU WITH WAREHOUSE RECEIPT SYSTEM COUNCIL
4th May 2021. The partnership will see AFC and WRSC develop financial products aligned with the warehouse receipt system operational framework. The two organizations will jointly undertake capacity building to support stakeholders and value chain actors. In addition they will undertake collateral and risk management of commodities that have been pledged for purposes of de-risking the agriculture sector and consequently enhance access to finance. This partnership will also see the organizations carry out joint sensitization forums, workshops and seminars to increase the usage of warehouse receipt system in the country. At the organizational level, AFC and WRSC the partners have committed to develop staff capacity through training and information sharing. The partners agreed to strategically mobilize resources aimed at strengthening the use of the warehouse receipt system in the country. Speaking during the event, AFC Managing Director Mr. George Kubai said that the Warehouse Receipt System will enable farmers access credit and avail them the opportunity to sell their produce at a favourable time and price. “The warehouse receipt system will enable the Agricultural Finance Corporation offer financial services to owners of commodities, who may be producers or dealers after depositing their commodities in certified warehouses and are issued with a warehouse receipt as proof of ownership. They will use the receipt as collateral to apply for AFC loans,” said Mr. Kubai. Mr. Kubai added that the implementation of the warehouse receipt financing under the partnership is expected to contribute to improved efficiency in agricultural trade; alleviating market instability and the resultant risks, leading to increased agricultural Productivity. Gains made will in turn lead to enhanced food and nutrition security, a critical pillar of the President’s Big Four Agenda. On his part, WRSC CEO Mr. Samwel Ogola said “We are collaborating with AFC, counties and other players such as Cereal Growers Association, East African Grain Council, Kenya National Federation of Farmers and Kenya Farmers Association to make sure issues like access to finance, harvesting, good agriculture practices, drying of produce on the farm and transportation to the warehouses are done professionally to reduce post-harvest losses, and other overhead costs”. The CEO explained that this system means a farmer, a trader, an aggregator or any other player with agricultural commodities such as grains deposit their produce in certified warehouses and will then be issued with a receipt as proof of ownership. This receipt is a legal document which can then be used as collateral to access financing. “This facility will revolutionize the livelihoods of farmers, they will no longer be at the mercy of brokers, as they can now decide when to sell. All they have to do is deposit their produce get a warehouse receipt and sell when demand is high and supplies are limited, they will break even as well as maximize on profits. However it is important for farmers to ensure that they continuously carry out due diligence in matters marketing so they sell at the best possible prices he explained” Mr. Ogola elaborated.