Absa Bank Kenya PLC and the eco.business Fund, an impact fund, have announced a USD 10 million partnership that will allow the bank to on-lend to domestic and export businesses involved in the country’s agricultural value chains.
The funding line is expected to improve agricultural resource efficiency, increase food security, and mitigate the effects of climate change. The two organizations will collaborate to improve the availability and quality of funding dedicated to agricultural value chains, as well as to promote sustainable practices throughout the sector.
“Supporting sustainable and climate-resilient agricultural practices and strengthening local value chains are some of the fund’s top priorities,” said Michael Evers, chairperson of the eco.business Fund Board of Directors. Our investment will help to equip various value chain actors in Kenya, such as agricultural producers, aggregators, processors, and exporters, with the funds and knowledge they need to achieve more biodiversity and climate-friendly sustainable production and exports while alleviating food insecurity. It is also the first step in a fantastic collaboration with the Absa Group throughout Sub-Saharan Africa.”
Kenya’s agriculture sector contributes significantly to the country’s economy, accounting for roughly 50% of GDP (including linkages), 60% of export revenues, and 40% of the workforce. However, the sector is facing macroeconomic and climate-related challenges, which are causing yield stagnation and contributing to food insecurity.
The burden on value chain actors is exacerbated by a lack of market access opportunities, increased post-harvest losses, and unstructured value chains. Furthermore, implementing climate-smart agriculture practices that ensure natural resource efficiency, biodiversity conservation, and climate change mitigation has a high financial and technical barrier. It is estimated that nearly a third of Kenya’s agricultural output is lost due to fragmented supply chains, outdated practices, and inadequate infrastructure.
Absa Bank’s Business Banking Director Elizabeth Wasunna stated, “As a bank, we are fully cognizant of the enormous contribution that agriculture makes to Kenya’s economy and as the country’s economic mainstay, and thus our collaboration with such like-minded partners towards the sector’s continuous growth and development.”
“We have embedded agribusiness as one of the growth pillars in our overall business strategy,” she added. As a result, we take a value chain approach, actively providing solutions to input providers, primary producers, aggregators, and agro-industry participants. This collaboration complements our four-pronged approach of market access, information access, mentorship and coaching access, and access to sustainable finance.”
The facility will be supplemented with a technical assistance facility aimed at value chain wide capacity building as part of the eco.business Fund’s commitment to promoting impact and sustainability. In the first program, over 300 value chain actors and Absa Bank clients will be trained on post-harvest loss reduction and financial literacy in the cereal, horticulture, and dairy value chains.
The eco.business Fund will also host roundtable discussions with exporters, aggregators, and processors to prioritize sustainability in two emerging export crops, avocados and macadamias.