Micro, small and medium agribusinesses in Kenya, Uganda and Rwanda are set to benefit, following the launch of a new revolving fund to boost their growth.
Private sponsors from Netherlands, through the Africa Agribusiness Academy (AAA) launched the fund, known as ‘stitching’ Africa Agribusiness Academy Fund (SAAAF).
It seeks to provide small loans to members of the academy and help them access capital to boost growth in their entire value chains, making them efficient, competitive and in control of their enterprises.
Launched in Nairobi, it also seeks to create opportunities for market access and access to skills and knowledge on financial management. Dr Stephen Birungi, the AAA Pan Africa board chair, said the organisation has set aside 400,000 Euros (Sh46 million) for the loans.
“With SAAAF, the organisation recognises agribased ventures’ potential and wants to give them the necessary impetus to grow.
The need is so big that we are calling upon other well-wishers to join us in this mission to develop Africa’s agricultural value chain through the lens of people who run the show – agribased MSMEs,” said Dr Birungi.
According to Mr Charles Gitau, AAA country director, the fund does not need any collateral and the application process was simple. Maturity is one year with an interest rate of 14 per cent on a reducing balance.
“The fund is based on trust. Through a peer to peer or ‘know your members policy’ it is able to monitor the progress of their businesses. Once the loan is paid, one can apply for another,” noted Ms Farid Karama, the executive director, AAA.
In 2016, a mid-term review carried out by the academy in six member countries revealed that access to finance for these enterprises remained the biggest challenge to their growth. Worse still, financial institutions were cagy in funding this category of entrepreneurs due to the risks involved.
About 400,000 MSMEs collapse annually and failure to act swiftly, will result in the ventures being unattractive to investors.
“We have embarked on a journey to support the growth of agribusinesses in this country. Our hope is to help them grow to the next level,” she said.
The organisation has about 100 agri-based entrepreneurs in Kenya and works with more than 200,000 smallholder farmers to create a ready market.