Stimulating Agribusiness Finance and Markets in East Africa



Introduction

Global Communities (formerly operating as CHF International) launched in December 2014 a new program entitled Agribusiness Investment for Market Stimulation (AIMS) in Kenya, Tanzania and Malawi. Funded by the United States Department of Agriculture, AIMS will expand trade in key agricultural commodities by increasing bank financing to small and medium agribusiness enterprises, and by multiplying their trade outlets.

Context
Agriculture in East African Economies

 
% GDP
% Employment
% Exports
Kenya
24%
75%
60%
Tanzania
28%
80%
85%
Malawi
29%
90%
90%


Agriculture plays a significant role in the economies of East Africa, as shown. Agribusinesses are the key to expanding the agriculture sectors and potentially the overall economies of the targeted countries—channeling small producers into commercial agricultural streams, such as value-added processing and commodity trade, to meet intermediate and end-market demand. But SMEs face constraints—including inadequate financing, lack of market information and limited market linkages.

Increasing Bank Financing and Technical Assistance

The core of the program supporting bank lending will be a proposed $50 million loan guaranty facility (LGF) backed by the Overseas Private Investment Corporation (OPIC) of the United States Government. This new facility will increase agribusiness SMEs’ access to finance, in part by reducing high collateral requirements of as much as 150% of loan value. SMEs with strong cash flows that lack this collateral are often excluded from bank lending. Loan guaranty facilities exist in all three countries, but are underused because lenders lack sector familiarity and loan products essential to service the agribusiness sector.

AIMS also delivers tailored training to lenders to improve their ability to serve agribusiness SMEs through stronger risk management and product design. AIMS will also build cash flow reliability for agribusiness operators. The program will support technical assistance to agribusiness entrepreneurs, their service providers, as well as for cooperative, warehouse, and exchange marketing specialists, all to spur better productivity, stronger trade linkages, and aiming to create a more predictable cash flow.

Combining better financing with broader market access will enable more voluminous and efficient agribusiness trade among a wider range of agribusinesses, whether operating incountry or across country borders.

Contacts

The Global Communities International Operations Project Management Team in Silver Spring, Maryland (USA) oversees implementation under the in-country direction of a Chief of Party, based in Nairobi, Kenya, to integrate operations in Kenya, Tanzania and Malawi. AIMS will continue to seek constructive collaboration with informed government and private sector counterparts—individual operators, and organizations—both in the target countries and in the region.

We encourage interested participants to contact us for more information:


USA Project Management
Jeffrey S. Dougherty, Program Manager
jdougherty@globalcommunities.org
    Nairobi Field Office
Kimberly Tilock, Chief of Party
ktilock@globalcommunities.org