The East Africa Exchange (EAX) will soon launch a Sh.200 million grain trade credit line for lending to small scale grain farmers in Kenya, in collaboration with ABC bank.
EAX is a regional commodity exchange that offers commodity trade service in Rwanda and the common markets in the East Africa Community (EAC) in key staple food crops such as maize, beans and soya.
The initiative will not only give small scale farmers access to affordable credit services from ABC bank; it will also solve the challenges of grain storage through warehouse services, give farmers better access to post-harvest management services, link them with reliable agricultural and financial markets and facilitate competitive pricing for their crops.
The deal is also supported by East Africa’s largest farmer organization, East Africa Farmers Federation (EAFF) which represents approximately 20 million farmers across eastern and central Africa.
It was launched by EAX Board Chair Former Ambassador Jendayi Frazer in Eldoret, Kenya heralding the commodity exchange’s plans to expand its operations into Kenya.
ABC bank’s Head of SME Banking Lee Gachomba called for the introduction of electronic warehouse receipting in Kenya as it ensures farmers get returns commensurate to their aggregate farm inputs and insulates them against losses incurred due to lack of proper storage facilities at farm level.
The partnership also laid down modalities on collecting reliable data on grain aggregation which will facilitate efficient grain trading as farmers, millers, traders and other stakeholders will be able to know the type and quantity of products available in a particular location.
EAX aims to transform East African agriculture by creating more bargaining power for smallholder farmers by providing accurate and reliable information, new methods of, and access to, secured storage, increased penetration of credit and agricultural financing among other services.
The subsidiary of Africa Exchange Holdings (AFEX) is financially supported through private investment.