Economy

Kenya gets Sh7.5bn AfDB loan for fertiliser, seeds

afdb

African Development Bank headquarters. PHOTO | COURTESY

Kenya has received a Sh7.48 billion loan from the African Development Bank (AfDB) to support fertiliser and seeds acquisition for 650,000 local farmers to boost food production and control consumer price inflation.

The loan is part of the AfDB’s $1.5 billion (Sh177 billion) African Emergency Food Production Facility, an Africa-wide initiative to avert a looming food crisis exacerbated by the war in Ukraine.

“The loan ($63 million) will support the country’s Ministry of Agriculture, Livestock, Fisheries and Cooperatives,” said AfDB in a statement.

“It will enable the government to promptly provide affordable fertiliser and seeds to farmers ahead of the October-December 2022 short rains and into the 2022/23 long rains crop production season.”

The AfDB loan entails the delivery of certified seeds, fertiliser and agricultural extension to 650,000 farmers to boost productivity, it said. An e-voucher system will be used to ensure that subsidies for inputs are “smart”.

“Successful implementation of the facility will see some 650,000 farmer direct beneficiaries, resulting in the production of 1.5 million tonnes of cereals and oil seeds. In all, the facility will positively impact some 2.8 million people,” said Dr Beth Dunford, the AfDB’s vice president for agriculture, human and social development.

Another component of the project will provide trade finance guarantees and leverage the private sector to ensure sufficient volumes of fertiliser are available to farmers.

“The government is looking into ways and means of addressing the cost of unga (maize flour) to bring it down so that consumers can afford it,” said Agriculture Cabinet secretary Peter Munya in a statement.

Kenya is among African countries, which have been hit hard by not only the inflationary effects of the war in Ukraine but also locust swarms and climate- and drought-related impacts.

“These overlapping shocks — together with the Covid-19 pandemic — have set back Kenya’s progress towards achieving the sustainable development goals,” said the AfDB.

The surge in global fertiliser prices began at the beginning of 2021 due to the impact of the Covid-19 pandemic. The ongoing war between Russia and Ukraine has worsened the situation.

Currently, fertiliser prices in Kenya stand at Sh6,000 per 50-kilogramme bag, a 71 percent increase from a year earlier.

The rise in prices is also due to producer countries such as China, Russia and Turkey restricting exports to protect their farmers compounded by heavy consumption demand from India, Brazil and US buying up large quantities, reducing available global supplies.

Kenya’s inflation hit a 58-month high in June on soaring prices of food items, breaching the government’s upper limit target for the first time since August 2017.

The inflation — a measure of annual changes in the cost of living— hit 7.9 percent in June from 7.1 percent in May, the Kenya National Bureau of Statistics reported.

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