May 14, 2008

ACDI/VOCA Helps Create First-Ever Warehouse Receipt System in Kenya

The Eastern African Grain Council (EAGC), in conjunction with ACDI/VOCA’s Kenya Maize Development Program (KMDP) and USAID’s Regional Agricultural Trade Expansion Support (RATES), launched the first-ever pilot warehouse receipt scheme (WRS) program in East Africa at the Nakuru Wheat Silos on April 21. Over 100 guests and stakeholders attended the event.

USAID/Kenya Mission Director Erna Kerst spoke at the event and reaffirmed the U.S. commitment to the maize sector through the KMDP’s support to maize producers and farmers associations. Following her presentation, Kerst cut a ceremonial ribbon officially launching the warehouse activity.

The WRS program is an innovative public-private sector approach to boost the Kenyan grain sector and also helping farmers to increase their access to credit. Producers store their grain in secure warehouses and use the warehouse receipts as collateral for obtaining credit for immediate financial needs. A certified warehouse management firm keeps the maize in a secure warehouse so that farmers can sell their maize later in the year when prices are higher, thereby increasing their incomes and protecting their harvest from rot and pests.

Although many banks were reluctant to provide credit based on grain as collateral, Equity Bank, a Kenyan institution, developed a financial product to serve the program. Equity Bank CEO Dr. James Mwangi spoke at the event about his bank’s commitment to farmers and to the activity and encouraged other banks to step up and participate.

Dr. Wilson Songa, Kenyan Agricultural Secretary of the Ministry of Agriculture, commended the WRS as an exemplary public-private partnership. The program involves private sector participation in every phase of the program, including participation by growers, transporters, traders, storage managers, processors, millers, local banks and input supply companies. It also involves various public sector organizations including the National Cereals Produce Board, USAID, Financial Sector Deepening Trust, SIDA and the Kenyan ministries of trade and agriculture.

To date, over 10,000 bags of maize have been delivered to the warehouse and Equity Bank has provided loans worth $130,000 to producers with warehouse receipts.

For more information on the Kenya Maize Development Program, click here.