KDC gives Githunguri Dairy Sh500m for small-scale farmer loans

The Kenya Development Corporation (KDC) has advanced Sh500 million to the Githunguri Dairy Co-operative Society for onward lending to farmers who rely on the dairy value chain for their livelihoods.

The funds form part of proceeds from a World Bank-backed support programme aimed at unlocking long-term credit access for Micro-, Small and Medium-sized Enterprises (MSMEs).

The programme, dubbed Supporting Access to Finance and Enterprise Recovery, was unveiled following the outbreak of the Covid-19 pandemic to help in aiding the recovery of small businesses ravaged by the disease.

“Through KDC, we are exploring ways to extend the lending period from the current seven years to 10 years and reduce the interest rate from 9 per cent to 8 per cent,” said Trade Cabinet Secretary Lee Kinyanjui.

“The objective is to make long-term credit more accessible to investors and institutions, particularly those involved in capital intensive industrial projects,” he added.

Githunguri is the third-largest dairy processor after the New Kenya Cooperative Creameries and Brookside.

The Kiambu-based milk processor and maker of Fresha milk started off as a small cooperative society in 1961, and has over the years ridden on low pricing to wrestle a sizeable market share from Brookside, New KCC, Kabianga Processors, Sameer Agriculture and Meru Farmers.

In July 2004, the society bought its own milk processing plant and has since been able to access a wider market through value addition.

The dairy society is supported by a network of over 27,000 small-scale farmers who supply over 260,000 litres of milk daily.

The newly-unveiled credit facility is poised to aid the farmers in purchasing better equipment, expanding their stock, as well as hiring more workers. The funds are also set to serve as a cushion from shocks such as drought and market swings.

The World Bank’s financial sector specialist, Leah Kiwara, termed the partnership between KDC and Githunguri Dairy as part of a broader effort to narrow the stubborn financing gap that holds back promising small firms across the country.

“Today’s partnership is a clear demonstration towards closing the financing gap that continues to limit the growth of MSMEs across the country. As we move forward, monitoring impact and highlighting success stories is critical to drive meaningful and sustainable MSME growth,” she said.

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