Farmers set to access Sh268 million credit to buy fertiliser

Fertiliser. [iStockphoto]

Farmers will benefit from the fertiliser credit guarantee financing from Africa Fertiliser Financing Mechanism project.

The project will help deliver nearly 8,000 tons of fertiliser to 100,000 smallholder farmers to boost production and incomes.

Through its Fertiliser Financing for Sustainable Agriculture Management Project, the Mechanism will provide a $2 million (Sh268 million) partial trade credit guarantee and a grant of $219,000 (Sh29 million) to Apollo Agriculture Limited to facilitate the company’s fertiliser sales.

The Norwegian Agency for Development Cooperation, through a contribution of $10.15 million (Sh1.4 billion) to the Mechanism, is also supporting the project, which was launched on April 8 in  Nairobi.

Kenyan smallholder farmers often lack the collateral to secure financing to buy the fertiliser.

The Mechanism, by sharing credit risk with suppliers like Apollo Agriculture, bolsters their confidence to offer fertiliser on credit.

Marie Claire Kalihangabo, Coordinator of the Africa Fertiliser Financing Mechanism, said: “The credit risk guarantee also provides finance directly to smallholder farmers at the last mile of delivery. It offers fertiliser, certified seed crop protection, and insurance against crop failure.”

The two-year-long project will use Apollo's digital platform to connect farmers seeking fertiliser and other inputs on credit with a network of 150 retail agro-dealers and 800 village-based agents. Kenya's fertiliser market involves importers, blenders, and a government subsidy programme.

"This support is in line with the bank's Feed Africa Strategy. It will ensure long-term private sector engagement in financing fertiliser, ultimately increasing food production and security in Kenya," said Nnenna Nwabufo, Director General of the African Development Bank’s East Africa regional office.

Benjamin Njenga, co-founder of Apollo Agriculture, explained that farmers can obtain high-quality farming supplies by paying a small deposit upfront, with the full loan being due when the farmer has harvested and sold the produce. 

"We believe increased and proper fertiliser use can significantly impact food supply and household income," Gunnar Holm, Norwegian Ambassador to Kenya, said at the launch.

Peter Owoko, Director of Policy at the Ministry of Agriculture and Livestock Development, announced new initiatives to strengthen food security.

“During the 2024 cropping seasons, the government targets to avail up to 12.5 million tons of fertilisers to farmers under the subsidy program,” said Owoko.

He thanked the African Development Bank for granting Kenya $67 million (Sh9 billion) in 2022-2023 through its African Emergency Food Production Facility.

Apollo Agriculture has already begun implementing the Fertiliser Financing for Sustainable Agriculture Management Project in Bungoma and Uasin Gishu counties, targeting maize production.

There are high expectations that the yield will increase for the harvest season starting in September 2024.

The project aligns with Kenya's Vision 2030, which identifies agriculture as a key driver of economic growth and food security.