Smallholder farmers in rural areas are set for a boost as the government plans to provide credit guarantee schemes and a green financing facility in a bid to reduce poverty.

The government and International Fund for Agricultural Development (IFAD) will invest $20 million (Sh2.9 billion) in existing Credit Guarantee Scheme under the National Treasury.

“This will be leveraged by the Participating Financial Rural Kenya Financial Inclusions Facility (RK-FINFA) institutions lending $80 million (Sh11.7 billion) to rural micro, small and medium enterprises (MSMEs) and agriculture value chains,” Treasury says. By combining these efforts, the government says it aims to reduce poverty, enhance climate change resilience, and improve livelihoods in rural areas.

The project will span six years, running from 2022 to 2028, with the overarching goal of transforming rural agriculture while promoting financial inclusion and green investments.

“The objective of the project being to reduce poverty, enhance climate change resilience and improve livelihoods in rural areas,” Treasury states in its Agriculture Sector transformation and Growth Strategy.
At the core of this initiative are two key components: The Rural Credit Guarantee Scheme and the Green Financing Facility. These schemes are designed to offer financial support to farmers and rural enterprises while simultaneously promoting environmentally sustainable practices in the agriculture sector.

According to strategy, the Directorate of Budget, Fiscal, and Economic Affairs, operating under the National Treasury and Economic Planning Ministry, will oversee the implementation of the project.
Their mission is to leverage private sector-led development to enhance financial accessibility for smallholder farmers and rural MSMEs. This approach is expected to foster innovation, resilience, and increased incomes within these communities.

The project development objective is to boost rural financial inclusion and encourage green investments across the entire agricultural value chain. By so doing, the initiative aims to create equitable employment opportunities, establish innovative and resilient production systems, and ultimately raise the incomes of smallholder farmers, marginalised rural households, women, and youth.

A vital aspect of the RK-FINFA initiative is its focus on specific beneficiaries. It aims to primarily serve low-income, economically active rural households, with a special emphasis on women and youth.

The project is committed to directly impacting 190,000 rural households through financial support and capacity-building initiatives. In line with their inclusive approach, the RK-FINFA project seeks to ensure that at least 50 per cent of its beneficiaries are women, with an additional 30 per cent comprising youth.

This groundbreaking initiative will directly benefit 66,000 smallholder households and 2,000 MSMEs. These beneficiaries will gain access to crucial financing options and receive essential technical support services.

By combining financial inclusion with green investments and empowering marginalised groups, the RK-FINFA project is poised to bring about substantial positive changes to rural Kenya, creating a more sustainable and prosperous future for its inhabitants.