The German Development Bank (KfW) has issued a Sh1.9 billion (12.5 million Euros) grant, to be disbursed to smallholder farmers to support irrigation scheme projects.
The financing whose agreement was signed upon yesterday will serve to extend a smallholder irrigation programme which has been running in the Mt Kenya Region since 2005.
Equity Group is expected to back the program by matching KfW’s grant with loan disbursements of an equal value to individual farmers in the project with the facilities having tenures of up to eight years.
Combined, the total financing from KfW and Equity Group will see the project scale up to 24 irrigation schemes from the current 19 while increasing the area of land under irrigation from 2000 hectares and the number of beneficiaries from 6000 farmers.
The project which now enters its fourth phase is expected to cover smallholder farmers in the counties of Embu, Kirinyaga and Tharaka Nithi.
Water, Sanitation and Irrigation Cabinet Secretary Alice Wahome says the blended-finance project is centered on improving the country’s food security through sustainable and resilient approaches including the move away from rain dependent agriculture.
“This is one of the projects that can help us address food security, especially at a household level. We expect to see the scaling of the project going forward through the inclusion of more partners,” she said.
The projects de-risks farmers via the provision of extension services and training which lowers the risk of default on advanced credit facilities.
Equity Group Managing Director James Mwangi said the project focuses on the production of high yielding crops for the export market.
“The objective is to achieve food security in the country by migrating farmers to high value crops including horticulture, fruits and vegetables,” he observed.
For the exchequer, the project has helped support smallholder farmers without reliance on funding from the government.
“The kind of ecosystem we are building will be sustainable and resilient as we are doing this off the budget and off-debt,” Treasury Cabinet Secretary Njuguna Ndungu highlighted.
During the programme’s third phase, KfW observed an increase in agricultural production.
KfW lists the overarching development objective of the program as improving the living conditions for rural households and transitioning from rain-fed agriculture to irrigated agriculture with small and medium sized land perimeters.
Before implementation, farmers are required to form cooperatives as a prerequisite to become a bankable legal entity.