Climate Innovation Center: Kenya
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Transcript of Climate Innovation Center: Kenya
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FIN 4 AG Conference
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• World Bank-infoDev initiative, funded by UK Aid and DANIDA
• Provides incubation, capacity building services and financing to SMEs developing climate mitigation/adaptation solutions
• Operational since September 2012, the first among the CICs that infoDev is launching globally
• GVEP International, PwC, Strathmore University and KIRDI are the lead partners in a consortium contracted by infoDev to establish and operate the KCIC. Actual implementation is done works with many supporting partners and collaborators.
• Currently in the process of incorporation as a Company Limited by Guarantee to strengthen sustainability of its operations.
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What is the KCIC?
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Why Agricultural Financing
• Food Insecurity - Kenya produces 75% of maize, 30% wheat and about 25% of rice needs
• Starvation and malnutrition• Huge income inequalities• High unemployment levels• High incidences of Poverty• Poorly developed value
chains
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Agriculture is the key economic activity in Kenya contributing 80% of formal employment and 26% to the GDP
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Lack of coherence
food policy or Strategy Low crop
productivity
Dependency on Rain fed agriculture
Uncoordinated marketing
High, inaccessible ,l
ow quality yield
enhancing inputs
Limited access to Agricultural finance
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Challenges in Agriculture
…leads to low productivity
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The Missing Link
The smallholder farmers have many needs including:• Current accurate Market Information• Convenient Access to Inputs – Raw material, feed stock,
seeds, feeds, fertilizers, crop protection, veterinary health - & FINANCE
• Knowledge re Tools, & Training – beyond the obvious • Infrastructure - post harvest storage, warehousing,
distribution network• Supportive legal and administrative structures – help not
impediment• Better Linkages to Markets & Local Value Add industries
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DAUNTING LIST – WHERE TO BEGIN?
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Why Limited Funding by Commercial Entities
• High Interest rates • Real and Perceived risk exposure – production and marketing risk• Effects of climate change• Mistrust in contracting farming
– High transactions– Poorly enforced– Lack of Trusts in contracts (Side selling )– Limited Risk sharing mechanisms
• Limited support services– Proper book keeping– Non accompanying technical advice
• Lack of bundles services • No Agricultural Insurance services• Lack of Market linkages• Unpredicted policy environment• History of loan write off
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KCIC Model
• Providing risk capital through a highly flexible fund that offers financing through two windows, namely proof of concept and seed financing
• Facilitating other sources of financing through syndicating investors, building partnerships with banks to facilitate working capital finance and facilitating consumer financing to ensure technology adoption in the market
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Key success cases
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Milestones
Mineral & Allied
SunCulture
Over the last 12 months, Animal Mineral & Allied Ltd had grown from a small Agro-vet shop that provides livestock inputs to farmers around Wangige Shopping Center to a major provider of hydroponics technology in the Country. It has opened over 15 outlets/contact points and installed 285 hydroponic units across the Country. The business has also grown its sales by 240%. The CIC support were mainly directed at growing market awareness , development of effective farmer outreach models and training materials. The business has also been assisted to patent the appropriate aspects of its technology.SunCulture is providing low-cost and efficient irrigation technology targeting smallholder growers of high-value crops in the country. The business has sold 32 irrigation in the last 6 months when it entered the market. The customers are further provided with extension support and linkage to competitive markets for their crops. The Company is currently embarked on a robust market expansion plan within Kenya and possibly Uganda over the next 5 years. The main CIC support has been in areas end-user financing through which the Company has successfully entered into partnership with Equity Bank. Additional support has been provided in setting up the Company’s financial management systems.
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