Kenya has started a pilot for a new digital service that will allow farmers to access loans using their harvested products as collateral. This new system is known as the Electronic Warehouse Receipt System, which was launched by the Ministry of Investment, Trade, and Industry in partnership with the Warehouse Receipt System Council.
The new system is quite simple, as it will allow farmers to keep their products in a certified storage facility and obtain a receipt for the products, which will then be used to obtain loans from various institutions such as banks.
According to the Warehouse Receipt System Council Chairman, Patrick Mbogo, during the launch, the new system will assist in handling essential activities such as licensing storage facility operators, registering farmers and traders, and recording the products kept in storage facilities.
This means that a farmer will simply take their products to a certified storage facility and obtain a digital receipt for the products, which will then be used to obtain a loan from a bank without the need to sell the products immediately.
Mbogo pointed out during the launch that the new system will assist in improving access to finance for farmers, reduce losses during the harvesting season, and organize the farming sector in the country. “This is an important step in helping farmers and agribusinesses access credit and improving efficiency in the sector.”
WRSC Chief Executive Officer Lucy Komen stated, “We have seen positive results from the pilot, which included the issuance of 144 warehouse receipts, out of which 44 have been utilized to access funding. We have seen over 11,700 bags of fresh produce stored in warehouses registered under this new system.” She added that poor storage has been a problem, and post-harvesting loss is estimated at 30-40% in agriculture.
This new system is expected to address this problem by providing access to better storage.
This new system is expected to provide new opportunities for employment in the agriculture value chain and access to new markets through trade agreements. According to Elizabeth Miguda, Director of Domestic Trade, “This new system has the potential to revolutionize agriculture in Kenya, providing new opportunities for improved earnings and market linkages.”
This new system was announced in response to Agriculture Cabinet Secretary Mutahi Kagwe’s appeal for enhanced public-private partnerships to support climate-resilient agriculture, modern technology, and data-driven solutions.
