Equity Bank has signed a 5.7-billion-shilling partnership with the European Investment Bank (EIB) aimed at providing economic opportunities for small holder farmers in Kenya.
The financing program, dubbed the Kenya Agriculture Value Chain Facility, was launched by the European Investment Bank in Nairobi on the 12th of June and is supported by the European Union.
The new initiative represents the first dedicated support for long-term investment by agriculture companies in Africa backed by the European Investment Bank, the world’s largest international public bank. The scheme is designed to tackle specific investment gaps currently hindering expansion in the sector.
Working with Equity Bank across country, the new Kenya Agriculture Value Chain Facility will help agricultural companies modernize and harness the full economic, employment and export potential of agriculture as well as expand business with local smallholders.
“The EIB is pleased to strengthen our close cooperation with Kenyan partners and the European Union Delegation to ensure that agricultural investment can increase under an exciting new scheme that acts as a model for our engagement across Africa” said Catherine Collin, European Investment Bank regional representative for East Africa.
Equity Bank is the first Kenyan partner to participate in the Kenya Agriculture Value Chain Facility but other financial institutions are expected to join later.
“The Kenya National Government’s Big 4 Agenda includes Manufacturing and Food Security (Agribusiness). Equity Bank has aligned its strategy with this national agenda, to focus on growing the Agribusiness portfolio through servicing all segments from retail, to SME to large enterprises and corporate banking customers,” said Polycarp Igathe, Equity Bank MD.
Equity Bank seems to have identified the potential for growth, by adding medium size and large commercial farmers to the Agriculture portfolio as well as focusing on financing of the Agri-Food processing companies.
According to the bank, this credit facility will be used for on-lending of up to 50 percent of project costs to beneficiaries who are eligible.
The bank says that the enterprises they are primarily targeting include Value Chain SMEs in agribusinesses that are supporting a smallholder farmer base.
This new agriculture financing initiative will address the gap of long-term funding in the sector identified as a key barrier to growth.