Aid in Action
Launch of the Warehouse Receipt Program
East Africans to Benefit From Grain Storage Scheme
Nakuru, Kenya
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Friday, April 25, 2008
The Eastern African Grain Council (EAGC), in conjunction with Kenya Maize Development Program (KMDP) and Regional Agricultural Trade Expansion Support (RATES), officially launched the much-awaited pilot warehouse receipt scheme (WRS) program April 21st at the Nakuru Wheat Silos in Nakuru. Attended by over 100 guests and stakeholders, this event highlighted the importance of creating a viable public private partnership that could make a significant contribution to the recovery of the grain sector in Kenya.
The idea behind warehouse receipts is to have producers store their grain in secure warehouses and use the warehouse receipts as collateral for obtaining credit for immediate financial needs. A certified warehouse management firm keeps the maize in a secure warehouse so that farmers can sell their maize later in the year and benefit from increased maize prices which usually occur several months after the harvest.
Although many banks were reluctant to provide credit based on grain as collateral, Equity Bank has developed a special financial product to serve this scheme. Equity Bank’s CEO, Dr. James Mwangi, spoke of his bank’s commitment to farmers and to the activity and encouraged other banks to step up and participate. Getting more banks involved in the scheme is critical to its success.
Photo: Steve Walls
USAID/Kenya Mission Director Erna Kerst cuts the ribbon at the official opening of the Warehouse Receipt Scheme program in Nakuru.
Dr. Wilson Songa, Agricultural Secretary of the Ministry of Agriculture, spoke of the warehouse receipt scheme as a perfect public private partnership. The WRS involves private sector participation in every phase of the program, including participation by growers, transporters, traders, storage managers, processors, millers, local banks, and input supply companies. It also involves various public sector organizations including the Ministries of Trade and Agriculture and the National Cereals Produce Board (NCPB). A number of donors actively support the WRS pilot activity, including USAID Kenya, USAID East Africa, the Financial Sector Deepening (FSD)Trust (a multi-donor endeavour) and SIDA.
Erna Kerst, USAID/Kenya’s mission director, spoke of the USG’s commitment to the maize sector through the KMDP’s support to maize producers and farmers associations. She also applauded the RATES program for promoting a “maize without borders” strategy aimed at enhancing grain trade in the region. After making her presentation, Ms. Kerst cut a ceremonial ribbon officially launching the warehouse activity.
To date, over 10,000 (90 kg) bags of maize have already been delivered to the warehouse and Equity Bank has already provided loans worth $130,000 to producers who have delivered maize to the warehouse and obtained a warehouse receipt.