FIN 4 AG Conference

• 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?

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

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

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?

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

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

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.