State set to upgrade godowns for farmers, small businesses

All the State-owned warehouses will be upgraded from July, the Trade ministry has announced, as Kenya steps up efforts to establish an agricultural commodities exchange.

Trade and Investments Secretary Peter Munya said this would facilitate the establishment of an efficient warehouse receipt system that small and medium-sized enterprises (SMEs) will use to supply produce to agro-processors in line with food security pillar of the Big Four agenda.

The warehouses will also be used to store construction materials for planned 500,000 affordable housing programme.

Legal backing

A Warehousing Receipt System Bill 2018, before the National Assembly, is set to provide legal backing for the operation of the system.

Small-scale farmers have largely shunned receipt systems by privately-owned East Africa Grain Council and the National Cereals and Produce Board due to unclear operating standards.

“We want to invest in an e-commerce platform to help SMEs access markets and this will require aggregation of supplies,” said Mr Munya.

He added that he is under firm instruction from President Uhuru Kenyatta to expedite the project.
“We want to also support affordable housing by providing warehousing to materials sourced from the SMEs.”

The warehouses earmarked for renovations are under Kenya National Trading Corporation (KNTC), an asset-rich State agency charged with helping the growth of the SMEs through the supply of raw materials, consultancy services and identifying markets for their products.

Industrial parks

The Nairobi-based KNTC owns 514,685 square feet of godowns in all major towns including Nairobi, Mombasa, Naivasha and Kisumu, which are targeted for setting up of industrial parks.

The parastatal, established in 1965, further has 16,659 square feet of leased warehouses in Meru, Machakos, Kitale, Kapsabet and Wote.

“We are looking at what the warehouses require because commodities exchange will certify warehouses so that international standards are met when storing produce,” acting managing director Joel Imitira said.

Suppliers of agricultural commodities such as staple maize, rice, tea, coffee and cotton will be issued warehouse receipts — proof of quantity and quality of materials supplied — which can be used as collateral to access credit.

The KNTC plans to spend an initial Sh100 million in renovating warehouses targeted for commodities exchanges in Nairobi and Mombasa in the financial year starting July, Mr Imitira said.