Industry Insights

Kenya Sign $200 Million Agreement to Stimulate Rural Farming

Kenya is expected to gain from a $200 million (roughly Ksh26 billion) agreement with the UK to enhance rural community farming and lessen the nation’s reliance on food imports, thereby reducing Kenya’s trade deficit.

Under the terms of the agreement, Kenya will receive over the next five years Agri-fin-tech services for rural communities, high-productivity climate-smart farming, and cutting-edge agro-industrial facilities from the British investment group United Green Group (UG).

Mr. Moses Kuria, Kenya’s Trade Cabinet Secretary said “We are very grateful for the investment which will support the Kenyan Government’s strong commitment to agricultural transformation, increased productivity and output, and inclusive growth of local agriculture and associated industries.”

“We are proud to have found such committed foundation partners and identified potential additional partnerships with international DFI’s and look forward to building a national champion business in the sector together,” said Albrecht Frischenschlager, UG’s chief investment officer.

With a focus on meeting local consumer and industry demand and consumer value addition carried out within Kenya, it is anticipated that the targeted high-value crops, such as rice, cotton, sunflower, soybean, and maize, will generate foreign exchange.

At least 100,000 tonnes of locally produced rice products (16 percent of local demand) and another 100,000 bales of cotton products (16 percent of current local production) equivalent are included in the value addition. These products will support the Kenyan textile industry.

The agreement was signed by Prof. Peter Anyang’ Nyong’o, the governor of Kisumu County, Mr. Kuria, and Frischenschlager.

The development of inclusive, scalable, market-based, environmentally sustainable, and highly productive agri-food systems in Kenya, according to Nyong’o, requires the leadership and wise investment of a champion organization.

“This project has an incredible alignment to the Kisumu’s strategy and with the national Government’s Agricultural Sector Transformation and Growth Strategy 2019-2029, we will significantly contribute to all nine ASTGS flagships,” he said.

Frischenschlager said the investment would not have been possible without market orientation, business process guidance and support from the UK Government.

The British High Commission in Kenya, the Agricultural Transformation Office, and the Kenyan Ministry of Investments, Commerce, and Industry were specifically mentioned for their crucial assistance.

Kuria stated that he is prepared to support the program and is optimistic about the anticipated favorable consequences, which include the creation of jobs, increased crop production for the community of out growers, and improved livelihoods that may be implemented throughout Kenya.

According to the most recent data from the Kenya National Bureau of Statistics (KNBS), the cost of food imports into Kenya increased by 18% to Sh183.93 billion in nine months from Sh155.42 in the same period of 2021.

Since 2017, when the bill stood at Sh185.22 billion, this is the largest sum recorded in a year’s first nine months, indicating increased food imports during the election season.