Key Recommendations to Unlock Agriculture Funding by Jimnah Mbaru

Jimnah Mbaru, the Chairman of Nairobi Chapter of the Kenya National Chamber of Commerce and Industry (KNCCI) has challenged the government to introduce measures to transform the agriculture sector. Speaking during the 6th Africa International Exhibition and Conference on Agriculture Technology (Agritec Africa) at Kenyatta International Convention Centre (KICC), the billionaire investment banker, noted that despite the sector remains under-resourced, under-invested and un-productive. This is despite the fact that it contributes to over 50% of the country’s GDP both directly and indirectly through linkages with other sectors such as manufacturing. The sector employs over 40% of the population, 70% of the rural population and accounts for 60% of our total exports. In this respect, he has made four recommendations that would unlock more funding, attract private investment and improve productivity.

He recommends the creation of an Agricultural Development Bank funded by the government to the tune of Ksh. 100 Billion to finance activities in the entire agricultural value chain. He further urges changing of pension fund regulations to allocate at least 5% towards investment in the agricultural sector. With pension funds estimated at over Ksh. 1.2 Trillion, this would translate to Ksh. 60 Billion that the bank could tap into by issuing corporate bonds through the Nairobi Securities Exchange.

He also recommends the transformation of the National Cereals and Produce Board into a Warehouse Receipting Corporation where farmers can store their grains in exchange of warehouse receipts. Farmers can borrow against these receipts in order to finance their working capital needs. Such a system will ensure over 5 Million small scale farmers are shielded from price fluctuations and only sell when the price is right.

Thirdly, he asks the government to expedite the creation of Kenya National Multi Commodities Exchange Limited (KOMEX) to provide a platform where farmers can trade their warehouse receipts. Such a system will eliminate unnecessary middlemen in the value chain and farmers will derive maximum value for their work motivating them to improve their productivity.

Finally he recommends the introduction of the controversial genetically modified crops and foods in the economy. He argues that over 100 studies done by Wilheim Klumper and Martin Qaim found that, adoption of GMO technology reduces chemical pesticide use by 37%, increased crop yield by 22% and increased farmers’ profits by 68%. Opponents of GMO technology associate it with the rise of cancer and it remains a divisive subject in the country with a lot of people having little or no information on the same.

Through these measures, the government will unlock investments in the agriculture sector and compensate for the deficit of over 7% as per the Malabo Declaration which recommends for 10% of total budgetary allocation to agriculture sector. Kenya has consistently failed to honor this declaration by African states with the recent budget allocating a meagre 2.5% of the Ksh. 3 Trillion budget to the sector.

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