It is no secret that agriculture contributes the bulk of Kenya’s exports and that the European Union (EU) is the biggest export market for Kenyan horticultural products. But still there is enormous untapped potential for Kenyan products to access other high-value markets and for job creation in line with the Big Four agenda.
So how then do we match the export potential with job creation? The government’s new forward-looking strategy in the agricultural sector; ‘The Agriculture Sector Transformation and Growth Strategy (ASTGS)’, launched just a few months ago, is providing the answers, and the EU is helping to ensure these answers reach the different parts of Kenya.
The EU and Kenya have for decades partnered to support agriculture, job creation and drought resilience.
The EU has been a steady supporter of agricultural transformation in Kenya, for example through the piloting of the e-voucher system for providing agricultural inputs to smallholders.
In the new look e-voucher subsidy model the whole agricultural value chain approach will be used and disruption of private sector investment in input supply will be avoided.
The EU has also heavily contributed to research and upscaling of technological innovations, animal disease control, biological plant pest control, climate-smart agricultural practices, improved nutrition and much more.
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Drought resilience through the National Drought Management Authority, land governance with the Ministry of Lands and National Land Commission, and nutrition statistics are other areas of engagement.
In order to transform the advances accrued in Kenya, the EU is supporting several trade facilitation activities, particularly in improving compliance with European quality and food safety standards so that more produce is sold in Europe and other markets.
However, as the Government’s new ASTGS recognises, a lot remains to be done to improve job creation along the value chain in Kenya and the overall business environment in the sector. For this reason, the EU is supporting the value chain actors at different levels for example supporting central competent authorities such as Kephis and DVS to develop the capacity of counties to enforce food safety standards.
The latest piece in the jigsaw is “AgriFI Kenya”, which in CS Kiunjuri’s words, “will transform smallholder producers into meaningful actors in the formal agriculture value chain”. Today, the government and the EU will present funds to the eight Kenyan Small and Medium Sized Enterprises that were successful in the first round of calls for funding under the AgriFI Challenge Fund. These are all companies that proposed an inclusive business model, working with smallholder farmers going beyond the model of reciprocal mistrust, and promoting co-operation between actors in the value chain. Off-takers need reliable supplies of adequate quality and farmers need market access at decent prices and support to understand market requirements.
Why have the Agriculture ministry and the EU chosen to support agriculture in this way? We chose this approach because we recognise that smallholder farmers do not need handouts: They need to be promoted to be successful market operators.
However, the sector needs to be supported through affirmative action that reduces the risk of investing in a difficult environment through providing access to finance. Further options for loan funding will still be possible under a facility between the European Investment Bank and Equity Bank, also part of the AgriFI Kenya programme.
Farmers need to know what the market requirements are and how to adapt their agronomic practices to it.
Those best placed to provide this information are their partners representing the backward and forward linkages in their value chain.
Therein lies the future of boosting the Kenyan agricultural sector and creating more jobs. By funding around 50 businesses who integrate smallholders in their value chains, the AgriFI Kenya Challenge Fund will support more than 100,000 smallholder farmers, creating sustainable jobs and market opportunities for the Kenyan agricultural sector.
Finally, implementation of the Warehouse Receipt System and a Commodity Exchange by the Government of Kenya will lead to an exponential growth in productivity in the agricultural sector that will subsequently spur the profitability and growth of SMEs in agriculture. This calls for financial support that AgriFI may provide.