At least two million smallholder farmers in Kenya and Rwanda are set to benefit from a $30 million partnership to promote financial inclusion between the Kenya Commercial Bank (KCB) Group and The MasterCard Foundation.
“We are reimagining and redefining the agricultural sector with a view of transforming agribusiness by accelerating financial services access,” said KCB Group CEO and Managing Director Kenya Joshua Oigara.
The partnership targets smallholder farmers and pastoralists in the agricultural sector which is largely unbanked in Kenya and Rwanda.
According to Oigara, only three per cent of loans in the banking sector are channelled into agribusiness in Kenya despite the agriculture sector contributing 30 per cent to the country’s GDP and employing more than 60 per cent of the population.
The KCB-MasterCard Foundation initiative aims to reach farmers in the dairy, livestock and food sub-sectors; 60 per cent of them women.
It also includes a $200 million loan program dubbed KCB MobiGro to give the farmers credit at affordable rates from KCB for the next five years.
Oigara added, “We believe that technology supported agribusiness is an emerging and fast growing frontier that will embolden the agricultural sector to be a stronger driver of economic expansion in the East African region.”
KCB MobiGro will provide a mobile phone-based technology solution known as M-Kulima that will enable small scale farmers to access financial services such as credit, insurance and savings through their mobile phones.
It will also be a platform for sharing information on crop and livestock management; pricing; market trends; and as a link to various actors in the value chain.
“This partnership will help us understand to what extent access to mobile-based financial services and agricultural information can help smallholder farmers and pastoralists achieve higher productivity and returns, thus providing them with a pathway out of poverty,” noted Ann Miles, Director of Financial Inclusion and Youth Livelihoods, The MasterCard Foundation.
The money will be used to train the farmers on financial literacy and business management to improve their production and stock management.
It will also be directed towards extending mobile financial services, research and to facilitate cross-learning between producer organizations.
The project will expose Kenyan and Rwandese farmers to market opportunities for their produce and give them access to vital information on product improvement and agricultural and entrepreneurship training sessions.
Eligibility for entry is either individual or through organized farmers’ associations.
KCB is East Africa’s largest commercial bank with operations in Kenya, Tanzania, Uganda, Rwanda, Burundi and a representative office in Ethiopia.
The two partners will each contribute $15 million.