The European Alliance on Agricultural knowledge for Development
13 June 2019. Nairobi. European Investment Bank has launched a new EUR 50 million (Ksh. 5.7 billion) agriculture sector financing programme. The Kenya Agriculture Value Chain Facility was launched by the bank in Nairobi today and it 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.

  • Sh5.7 billion will be lent out on a long-tenure basis of seven years on a collateral-free basis and will be managed by Equity Group
  • A further Sh962 million is to be dished out in two equal halves, one as a loan managed by Equity Bank and another as a grant to be given to successful applicants by the facilitator Self Help Africa.

This means fresh produce suppliers to local retail chains as well as agro-processors handling export contracts will have activities reviewed together with their financial history to determine their worth when applying for the loans.

“The European Investment Bank is pleased to launch our first dedicated support for long-term investment in African agriculture here in Nairobi. Working with Equity Bank across country the new Kenya Agriculture Value Chain Facility will help agriculture companies to modernise and harness the full economic, employment and export potential of agriculture as well as expand business with local smallholders. As the EU Bank, 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.”  EIB regional representative for East Africa Catherine Collin

Under the new financing programme agricultural companies across Kenya will be able to access Kenya Shilling loans with maturities of up to 7 years, longer than commonly available in the market. This is expected to help companies to expand, upgrade and modernise their equipment thereby improving productivity, and strengthening integration of smallholders into the agricultural value chain.

The new initiative is designed to increase investment activity by agricultural companies and by making available funding in Kenya Shillings will mitigate against exposure to foreign exchange risks that currently hinder agriculture investment.

The impact of the new Kenya Agriculture Value Chain Facility will be strengthened by a dedicated technical assistance programme. This will improve financial assessment and monitoring of long-term agriculture investment by local banks.

The new European Investment Bank financing scheme will be supported by a EUR 10 million grant under European Union’s Kenya AgriFI programme. This will cover currency-hedging costs and technical assistance.


Source: PAEPARD FEED