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Tackling Agri-finance risk like a pro: Insights from Kenya's Central Bank

 

Risk taking is a dominant issue in the agriculture sector. As I reflect on Session 29: Central bank forum: agriculture’s significance for the financial inclusion and stability agenda at the Fin4Ag Conference underway in Nairobi this week, I can’t help but wonder what would be the situation if financial systems across the developing world were more responsive to change, better structured and managed?

It is these conditions that have enabled Kenya to become a shining light in ICT and agri-finance tools development and deployment.

Two Kenyan platforms typify this:

1) A platform for Financial Services;

2) A platform for Information Search and Market Efficiency.

To underscore how Kenya’s banking agility sets it apart, consider the fact that central banks cannot themselves offer financing, but must only help create the enabling environment to develop the markets that will help support agricultural value chain expansion.

That doesn’t tame the Governor of Kenya’s Central Bank, Prof. Njuguna S. Ndung’u from being a robust supporter of the sector.  

“Introducing various aspects of market development that are going to reach out to all sectors of the economy i.e. mobile phone financial services, agency banking – where agents work as agents for banks, where there is principal agent’s mechanism – and create micro-finance banks and or institutions that can reach out to the farmers”, said Ndung’u.

He also champions providing an enabling environment for risk coverage and risk analysis as key for pricing in risk so that effective and attractive insurance products can emerge to support the agriculture sector.

I am encouraged by these developments. Are you?

Photo credit: Neil Palmer/CIAT

Blogpost by Elenoa Salele, Social Reporter for the Fin4Ag Conference.

Copyright © 2016, CTA. Technical Centre for Rural and Agricultural Cooperation

CTA is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). CTA operates under the framework of the Cotonou Agreement and is funded by the EU.