The Warehouse Receipting System (WRS) Council and KenInvest have signed a memorandum of understanding (MoU) that will see investors get an opportunity to finance various projects aimed at setting up a commodity exchange.
In the MoU, KenInvest, the government’s investment arm, will look for investors willing to partner with warehouse owners by putting up the required infrastructure to support the proper storage of commodities.
The warehouse receipting system has earmarked 13 commodities including fish, powdered milk maize and beans.
WRS Council chief executive Samuel Ogola said some of these commodities would require cold rooms and reconditioned warehouses to meet the required standards.
“Some of these warehouses are not in proper conditions and investors will help in fixing them to meet the required standards and put in place necessary infrastructure such as cold rooms,” he said.
KenInvest will also help in providing facilitation services to investors to enhance domestic and foreign investment in the warehouse receipt system value chains.
“There are readily available investment opportunities in aggregation of commodities, warehousing services for dry and perishable commodities, value addition and financing,” he said.
Although WRS covers all agricultural commodities in Kenya, phase one roll-out focuses on maize, beans, green grams, coffee, wheat, rice, processed milk, potatoes, macadamia nuts, pyrethrum, cotton, coconut, processed meat and fish.
The warehouse receipt, which is negotiable and transferable will be mainly traded at the Kenya National Multi-commodity Exchange, providing a national and international platform for efficient and transparent price discovery and marketing system.
The commodity market is characterised by widespread post-harvest losses ranging from 30 per cent to 40 per cent and delayed or low payments to farmers.
WRS will help farmers to deposit their grain safely at the facility and in turn, get a receipt that they can use to get credit as they wait to sell their crop at a good price in future.
In June 2019, Parliament passed The Warehouse Receipt System Act, providing a legal as well as a regulatory framework for the development and regulation of a Warehouse Receipt System and establishment of the council.