The government is working towards validation of two vital policy reform documents: Sustainable Financing and Subsidy Management in Agriculture and the Public Finance Management (Agricultural Development Fund) Regulation.
Agricultural financing and subsidy support in the country continue to face challenges that include a clear policy framework resulting in disjointed approaches, hence limiting access to agricultural financing for various value chain players.
Speaking during a national validation meeting of the two proposed draft policies, Agriculture Secretary at the State Department of Agriculture Collins Marangu said these challenges hamper efforts to increase agricultural productivity, improve food security, and enhance rural incomes.
He noted the absence of a clear, coherent policy framework marred by poor coordination, duplication, and inefficiencies across national and county governments has seen smallholder farmers and value chain actors locked out of financial services and subsidy benefits, limiting sector growth and access to modern inputs.
“These policy reform documents, which are for our validation today, have been prepared through inclusive consultations among diverse stakeholders at national and county levels, seek to seal the policy gaps, and provide a coordinated strategy for mobilising, managing, and monitoring agricultural financing and subsidy programmes,” Marangu said.
The key pillars of the framework being validated include the development and promotion of inclusive financing mechanisms such as e-voucher systems, digital credit platforms, and agricultural insurance products.
The framework, he added, recognises the vital need to register approximately 1.4 million high-needs farming households across the country to enable them to access inputs in a targeted and efficient manner through an e-voucher delivery platform.
“By empowering these households, we embrace equity and sustainability within government support programmes,” he said, adding that reforms on the two documents will transition Kenya’s agriculture from largely subsistence-based production to a modern, innovative, and commercially competitive sector.
Central to this transformation, the Agriculture Secretary noted, is increasing access to affordable financial products, promoting inclusive growth, and implementing transparent subsidy schemes that target the most vulnerable farmers effectively.
Marangu also emphasised stronger coordination between national and county governments, enhanced participation of the private sector, and institutional reforms to improve governance and accountability.
“I commend all parties for their valuable contributions thus far and call upon all participants in this validation workshop to give candid input, engage constructively in discussions, and build consensus on the best possible policy arrangements that will see the needs and aspirations of all stakeholders in the agriculture sector addressed,” he said.
Marangu reiterated the government’s commitment to supporting the operationalisation of the policy framework to mobilise sustainable financing, boost production, and improve rural livelihoods, saying in doing so, it will contribute decisively towards achieving food and nutrition security, reducing poverty, and creating jobs for Kenyans.
Peter Owoko, Head of the Policy Unit at the State Department of Agriculture, said the policy framework is trying to align matters of budget and subsidy provision.
Sometimes, he explained that when they are not aligned, the subsidy ends up not being effective, efficient, and impactful because it’s not addressing the beneficiary’s need, and thus, there is a need to restructure our subsidy system.
“Farmers may benefit from insurance subsidies and may benefit from inputs like fertiliser and seed, but then if they do not distribute this to farms, then the impact is not there,” he said.
Owoko further added that for efficiency and effectiveness, they are trying to ride on the digitalisation that the government is so focused on in getting to the farmer.
When farmer registration was being done, he explained that most had been asked to properly identify beneficiaries, but after the registration was locked, the messages that went out were not clear, and farmers were therefore a little bit sceptical about registering, and some who registered did not provide correct information, so this means planning becomes a little bit difficult and targeting farmers also becomes a little bit challenging.
“A key challenge being faced is in the element of leakages, where subsidy is provided for a certain value chain, and it may not work in another value chain, while other people who registered are not actually farmers, and they instead get the fertiliser and sell it, and those are some of the issues that need to be addressed through this policy framework,” Owoko said.
The financing ecosystem in most of sub-Saharan Africa is underdeveloped, especially as regards demand-driven agricultural financing solutions. For enhanced efficiency and effectiveness of agricultural financing options and input subsidy programs, the Ministry proposes a restructuring of the financing system and subsidy support system in its ASTGS 2019-2029.
By Wangari Ndirangu
