Across Africa, the banking sector lends a much smaller share of their loan portfolios to agriculture compared to agriculture’s share of GDP. This asymmetry is due to the associated risks which are mostly driven by limited understanding of the dynamics of this agriculture sector. A number of banks, however, are increasingly realizing that through best agribusiness finance practices, they can harness opportunities in this sector with highest contribution to GDP in Kenya. It is with this in mind that Global Communities under the United States Department of Agriculture (USDA)-funded Agribusiness Investment for Market Stimulation (AIMS) program partnered with industry specialist in Kenya including Central Bank of Kenya’s School of Monetary Studies (KSMS) and Financial Access East Africa (FAEA) to offer the Executive Certificate in Agricultural Finance (ECAF) a practical course on agriculture finance for bankers. The goal of ECAF is to build the capacity within the banking sector in Kenya to meet the credit needs of agribusinesses.
ECAF was launched on June 6, 2016. Since then, about 106 employees of leading financial institution have been trained-52 from Family Bank, 29 from Kenya Commercial Bank (KCB) and 25 from Cooperative Bank. The ECAF training module covers key topics including Agriculture & Agribusiness Dynamics, Agricultural Value Chain Analysis, Agricultural Lending, Credit Analysis, and Risk Management in Agriculture. The trainees come out of the training with a full understanding of the agribusiness sector. It is expected that these banks will better serve small holder farmers across Kenya by improving agribusiness lending.
“ECAF training is critical in building our capacity to better serve famer owned enterprises. The agricultural sector is a major contributor to the country’s GDP but the bank lending to the sector is only about 4%.The knowledge from this training will help us understand the dynamics in agribusiness sector hence improve our lending to farmers.”Pointed out Cooperative Bank Director Cooperatives, Vincent Maragu. He said this when opening the Cooperative Bank ECAF training that kicked off on September 12th to 17th.
ECAF is a demand-driven agricultural finance course. In addition to the three banks trained, other financial institution have expressed their interest to take part in the capacity building training course . Barclays bank is set for ECAF training as from 10th to 15th October. Banks are beginning to see how this training is critical in building their agribusiness portfolios.