Equity Bank and the Ministry of Agriculture have signed a Sh300 million agreement to finance farmers under phase two of the Agricultural Credit Guarantee Scheme (ACGS), in which the government provides collateral.
The partnership is a risk-sharing arrangement where the government provides a guarantee fund to cushion the participating financial institutions from any proven loss of the outstanding credit amount in default.
The initiative will provide smallholder farmers affordable financial services, boosting commercialisation of farming in a sector plagued by low production, poor marketing, and low financial literacy.
“This signing ceremony clearly symbolises the strengthening of the public-private partnership between a private organisation and the government. Our partnership with Equity Bank will help accelerate efficient and effective service delivery to low-income beneficiaries in the agriculture sector,” said Agriculture secretary Willy Bett.
He said this programme has helped to bring small-scale farmers into the formal financial system. Under the initiative, Equity will also offer farmers other services such as training, savings/deposits and linkage to crop insurance and markets.
The signing of the second phase of the deal marks the third time the ministry is partnering with the bank. The first agreement was in 2008 through the Kilimo Biashara Partnership and the second one in 2011 through the ACGS first phase agreement.
Equity chief executive James Mwangi said the total Kilimo Biashara loans disbursed by the end of last year was Sh7.3 billion and benefited 472,632 farmers since 2008.