Kenya should set up an agricultural development bank to be financed through pension funds and government-provided capital to spur productivity in the sector.
The Treasury should provide at least Sh100 billion to the bank while a change in the regulations of pension funds to allocate at least five per cent of assets to agriculture would add another Sh60 billion to the sector.
Kenya National Chamber of Commerce and Industry Nairobi branch chairman Jimnah Mbaru said this in a presentation at the sixth Agritech Africa International Exhibition and Conference on agricultural technology on Wednesday.
“First, I recommend the creation of an agricultural development bank funded by the government to the tune of Sh100 billion to finance activities in the entire agricultural value chain.
“In addition, I urge a change of pension fund regulations to allocate at least five percent towards investments in the agricultural sector,” he said.
“With pension funds estimated at over Sh1.2 trillion, a five percent allocation towards the agricultural sector would immediately unlock additional capital of about Sh60 billion that the Agricultural Development Bank can tap by issuing corporate bonds through the Nairobi Securities Exchange.”
The Dyer & Blair chairman said agriculture receives less than four per cent of the annual budget and less than five per cent of commercial lending leaving it significantly under-resourced.
“A well-capitalised Agricultural Development Bank will not only boost agricultural activity but it will also be key to deriving value from the significant infrastructure projects that the government has completed to date,” said Mr Mbaru.
He recommended the transformation of the National Cereals and Produce Board into a warehouse receipting corporation where farmers can store grains in exchange of warehouse receipts.