ABC Bank Group Managing Director Shamaz Savani with EAX Board Managing Partner Jendayi Frazer . PHOTO | FILE
Farmers can now access loans using their projected harvest following a deal signed between East Africa Exchange and ABC Bank.
Through
the agreement, the farmers would deliver their produce to a warehouse
approved by the bank and use the receipt as collateral to borrow money.
ABC
Bank Group Managing Director Shamaz Savani said the plan would also
enable farmers to protect their produce against storage-related damage
and negotiate for better prices.
“ABC
Bank is committed to providing customised financial solutions to small
and medium enterprises, including agribusinesses, which is a key
economic pillar that needs to be supported through financial
partnerships for Kenya to attain food security for her growing
population. They will definitely produce more and create jobs with this
initiative” Mr Savani said during the signing of the deal on Saturday.
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He
added that African grain market suffers from a range of constraints
including vulnerability to price fluctuations and weak bargaining
position by smallholder farmers.
Through
the deal, ABC Bank will provide finance for electronic warehouse
receipts to grain farmers and traders supported by East Africa Exchange.
It will also provide clearing and
settlement services integrated with the national payment systems as well
as mobile banking services.
East
Africa Exchange Managing Partner Dr Jendayi Frazer said the deal would
see more farmers access finance and get better prices for their produce.
“We
are currently trading grains such as maize and beans but going forward,
we will get into cash crops and soon minerals. Smallholder farmers will
now get a better access to commercial markets and a link to
agricultural and financial markets for competitive pricing,” she noted.
The
agreement is aimed at resolving problems associated with production and
sales. Frazer said it is also “a great way of freeing up financing
for the farmer.”
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