Access to credit can help livestock farmers boost production and employ better methods of livestock farming. It is estimated that 36% of rural Kenyans have no access to any form of financial services. Access to financial services is one of the obstacles that many farmers have to overcome to be able to engage in commercial livestock production.
High risks connected to drought, floods and the inability of small scale farmers to provide collateral for their loans have resulted in farmers getting the lowest levels of credit compared to other sectors in the economy. However farmers can overcome these hurdles.
Farmers need to consider livestock farming as a viable business rather than a daily occupation because a well organized farming business can easily attract funding. You need to provide good records and provide a clear growth path and demonstrate that the business can make profits. Banks and financing institutions support ventures that have potential to make profit and their owners are committed to making it happen.
Most commercial banks in Kenya shy away from providing loans because farmers cannot provide them with viable proposals in which the objectives and targets are clear. It might be argued that the risks involved are high due to unreliable weather but in livestock enterprises these risks can be greatly minimized with good management. However the requirement to offer security as collateral in most cases is a drawback as most farmers cannot afford it.
Farmers especially in the rural areas are not aware of the agricultural loans available to them. Some think that banks give loans to farmers only if they have a huge bank balance. This is not necessarily true. There are banks that have facilities for the small scale farmers and advice them on various ways of investing in their farms.
These are some of the financial institutions that provide credit to livestock farmers.
Kenya Livestock Finance Trust
Kenya Livestock Finance Trust (K-Lift) is a microfinance institution that offer credit to farmers and businesses in the livestock sector in Kenya. They off up to a maximum of Ksh. 1.2 million upon payment of Ksh. 250 application fee , completing a business proposal and presenting collateral or securities. The following groups are eligible for a KLIFT loan:
Equity Bank supports all categories of farming activities through the provision of farming inputs and equipments at affordable interest rates. Although requirements in terms of security and payments are flexible it is only available to account holders. There are various products with varying lending amounts and repayment periods depending on the farmers needs. Some of the products are:-
Farm Inputs Loan
This is a short term loan ranging from Kshs.1,000 to Kshs.100,000 paid within 1 year.
This loan is given in amount exceeding Kshs. 100,000 and repaid within 36 months.
There three types in this category where the amount ranges from Kshs.1, 000 to 100,000 for Kilimo biashara small scale payable in one year, amounts above Kshs. 100,000 for Kilimo biashara large scale paid in 3 years and loan amount depending on individual requirements and the ability to repay for Kilimo Biashara Agribusiness.
The loan amount in this category ranges Kshs 5,000 to 500,000from payable within one year. This facility is intended for micro enterprises dealing in livestock and cash crop production and to agricultural traders and agro-processors. Interested farmers need not have a remittance account.
The loan which ranges from Kshs 5,000 to 500,000 is paid within 24 months. Interested farmers must have an account to qualify for this facility. This is meant for small and medium scale farmers who want to invest in farm developments such as building of farm houses, farming expansion, purchase of livestock and farm fixed assets.
The loan amount is over Kshs. 30,000 paid in 24 months and intended for acquiring farm machinery, tools and equipment such as water pumps, drip irrigation kits and greenhouses.
To qualify for a loan you must have an account with Family Bank. The Dairy Products loan facility is designed for dairy farming. Other conditions are that the farmer must make milk deliveries to known milk processors. The amount of milk delivered determines the amount of loan a farmer can get. Up to Kshs. 100,000 can be advanced without securities and no guarantees are required. This loan is paid within one year
Agricultural Finance Corporation
AFC provides loans to individuals or groups carrying out livestock production activities. They have branches in most parts of the country. In livestock they finance dairy and beef production, sheep and goat production, beekeeping, piggery, poultry and fish production. These loans are repayed in periods between 2 and 5 years. To qualify for the loans farmers must provide securities and present a suitable and viable project proposal.
Faulu Kenya has a product called Ufugaji Bora specifically meant for livestock farmers. Farmers can use this loan to purchase dairy cows, animal feeds and expand dairy farming. They also offer training to livestock farmers.
Kenya Women Finance Trust
The Kenya Women Finance Trust has a livestock loan product especially designed for rural women. Women who are interested in dairy farming can access this credit facility to start or improve dairy farming. Animals are identified by the women and inspected for health by a veterinary personnel and KWT team. If the animal is cleared it is insured by Jubilee Insurance, and KWFT pays for the cow.
Other aspects of livestock financing covered by KWFT are purchasing goats and acquisition of biogas digesters.
Brookside Dairy Ltd
Brookside Dairy supply farm inputs and animal feeds on credit to dairy farmers. They have a loan facility which is lent to farmers through Kenya Commercial Bank.