India’s $250 million (Sh36billion) agricultural loan to Kenya will partly be used in mechanising small-scale farmer operations, its High Commissioner said on Tuesday.
The Asian giant in December promised to loan Kenya the funds with below market rates during a visit by president William Ruto.
Kenya has 7.5 million smallholder farmers, accounting for 80 percent of the country’s total agricultural output.
“Both governments have agreed to further expand agriculture cooperation and assistance specifically we are looking at extending the concessional line of credit to Kenyan government and stakeholders equivalent to $250 million to meet the priorities of agricultural mechanisation in the area identified by the government of Kenya,” said Namgya.
While use of tractors, planters, harvesters, and irrigation systems has significantly picked in Kenya over the past decade, it remains insufficient, contributing to Kenya achieving only 25 percent of its potential farming yields.
Limited financing options and high interest rates have been cited as key barriers. The Sh36 billion credit will make it easier for Kenyan importers to buy agricultural goods from India.
Namgya was speaking during the signing of collaboration between Mahindra Tractors and Simba Colt Aspire Ltd.
The pact aims to support farming mechanisation through the provision of a comprehensive range of tractors to farmers.
According to the Agricultural Sector Transformation and Growth Strategy (ASTGS), Kenya’s agricultural mechanisation stands at 30 per cent of arable land.
The government intends to increase this to over 50 percent by the year 2029.
Industry Principal Secretary Juma Mukwana said the government plans to reduce food imports through mechanisation of small-scale farming.
“We are importing a lot of food; we need to increase our production through mechanisation,” said Mukwana.
He said Kenya is introducing country industrialisation and aggregation parks where each county will put in Sh250 million and national government Sh250 million in the project that will cost Sh10 billion.
He said is also expecting $100 million (Sh14.5 billion) loan facility from the Indian Exim Bank to boost small scale manufacturing.
“We are importing a lot of food; we need to increase our production through mechanisation,” said Mukwana.
He said Kenya is introducing country industrialisation and aggregation parks where each county will put in Sh250 million and national government Sh250 million in the project that will cost Sh10 billion.
He said is also expecting $100 million (Sh14.5 billion) loan facility from the Indian Exim Bank to boost small scale manufacturing.
The PS said the state has already conducted mapping of the different regions and the product they will be offering. He added that Busia will do sunflower, cotton Bungoma will do avocado, and some counties will do wheat.
Simba Corporation chief executive Dinesh Kotecha said that any financial incentives extended to farmers towards mechanisation would be a boon to the economy through job creation as well as other multiplier effects accrued in the various crop value chains.
He called on the government to zero rate the 16 percent Value Added Tax (VAT) currently levied on farm implements, among other incentives for farmers.
Through the partnership Mahindra tractors will be sold through Simba Colt Aspire Ltd branches in Nairobi, Kisumu, Narok, Kisii, Mombasa and Nyeri as well as three dealers in Nakuru, Kericho and Nairobi.
Source: The Star