Absa ponder digital solution to tap farmers
Absa Kenya is developing a digital solution to enable Kenyan farmers overcome challenges hindering them from accessing quality financial services, managing director Jeremy Awori has said.
Despite contributing 33 per cent to Kenya’s Gross Domestic Product (GDP), the sector suffers from a chronic lack of suitable financial products especially for small actors.
“We will soon unveil a digital solution to help address some of the challenges to lending in the agriculture space,” Awori told a gathering of agricultural exporters on Thursday
The sector employs more than 40 per cent of the total population and 70 per cent of the rural population in addition to providing 65 per cent of the total country’s exports, giving the population 18 per cent of the total formal employment.
However, according to Awori, productivity has stagnated in recent years, with smallholder farmers and agricultural enterprises unable to access funds, training and technology to grow their businesses and improve the quality of agricultural goods.
In 2020, Kenyan banks lent agribusinesses Sh108 billion in bank loans representing 3.59 per cent across the sector, out of which Sh23.3 billion or 5.34 per cent were non-performing loans.
Credit allocation to agriculture Micro, Medium and Small Enterprises stood at a low of 3.7 per cent.
“This shows there is a hesitation to invest in the sector due to factors such as unpredictable weather conditions, small scale/subsistence farming that occurs in our market, slow adoption of agri-technologies, price instability and perishability of goods,” Awori said.
