"No one drinks oil or smokes gas. We eat food and that should tell you what our priority should be," quipped Dr Akinwumi Adesina, the Minister for Agriculture and Rural Development in Nigeria, in a televised debate at the 2013 World Economic Forum for Africa. The crowd burst out in laughter, but the comment changed the conversation's course for the rest of the 55-minute debate. Food business and agribusiness is a current action for a secure future. If Africa can restructure and improve regulatory and business framework for agribusiness, the continent will command a whopping $1 trillion by 2030, compared to $313 billion in 2010. Currently, agriculture and agribusiness together account for nearly half of Kenya's GDP.
Agriculture is one of the economic pillars of Kenya's Vision 2030, which is aimed at a sustained minimum annual 10 per cent growth. Research by the Kenya Institute of Policy Research (Kippra), indicates that agriculture and agribusiness form the biggest job-creators in the country. Growing media attention toward agribusiness has drawn a significant increased investment in the sector.
However, most focus has been on the productive sector of agribusiness; what we traditionally call farming. Research, however, shows that out of 64 investment opportunities in agribusiness; production is just one of them. The rest are spread in trade, agriculture value chain, value addition and technology. Financial services providers like Transnational Bank offer value chain enhancement products targeting the agribusiness sector in the country; facilitating the "seed to the mouth" process; the economic agribusiness process chain from the planting of crops, harvesting and distribution to the consumer.
Most African countries have a comparative food advantage; with more than half of the world's arable idle land in Africa and a lot of underutilised water resources, Africa owns the natural machinery of "grand" agricultural production. There is growth opportunity for agribusiness in the country, with the domestic and global markets experiencing a growing demand for food. Urban consumption is set to increase on the continent, with World Bank predicting growths in urban markets of up to $400 billion by 2030. This has a resultant increase in investments in processing, logistics, market infrastructure, retail networks, trade and technology.
This further increases the contribution of the agribusiness sector to the economy. Regional integration and cooperation is opening East African markets to Kenya's produce. Infrastrustructural investments including the Standard Gauge Railway, the Lamu Port, Southern Sudan Ethiopia Port (Lappsset) project and Isiolo Resort City will open up Kenya to more international markets by facilitating faster access to these markets.
A major challenge to agribusiness has been the lack of financial system to support small scale farmers, and value chain enterprises; that enable produce to move from the farmers to the markets. With the systems framework clear, financial institutions can then inject capital to boost agribusiness through financial services' access to producers, and working capital products for manufacturers and processors.
Success in agriculture will have a spiral effect on rural development across the country. For example, Bomet County is the first maize-producing region to harvest in July, four months before the produce from other maize-producing regions hits national markets. The financing gap in Bomet is the facilitation of produce to move to the market, not warehousing. Transnational Bank has provided capital assistance to a local maize miller with the capacity to process tonnes per month. This will create an immediate market outlet for maize produced in Bomet and the neighbouring counties. Many times, farmers are at the bottom of the financial investment products' pyramid. But also, low levels of financial literacy in the rural areas has been an impediment to broadening the benefit of economic development. The majority of unbanked farmers live more than 20 km from a bank branch or an ATM. Their average transactional value is small, which creates unfavourable cost-benefit ratios for the farmer's access to normal banking services. Secondly, the farmers need to access conventional banking services to expand to global trading. The substituted banking services like table-banking exist outside the conventional banking framework and are limited in their capabilities to boost larger capital margins.
Mobile banking technology, through Transnational Bank's PAYNET system, has closed this financial gap. PAYNET facilitates payments and transactions from any local or international bank. Transnational Bank has partnered with 19 SACCOs with a total membership of 24,600 members to facilitate payments between tea companies direct to farmers phones in Kericho, Nandi, Bomet and Nakuru counties. The farmers receive notifications of deposits on their mobile phones which they can withdraw through an MPESA outlet nearby. This service also benefits security companies guarding the tea zones and various flower farms in the country who pay their casual workers using this service. To further broaden access to financial services, Transnational Bank is rolling out agency banking in rural areas served by partner SACCOs. This will enable the farmers save money, transfer cash to other users and open bank accounts. Banking services available on Transnational Bank's agency banking model will improve the farmers' ability to save and borrow, empowering them with the financial tools for expansion and growth.
The Bill will allow the deputies to attend the Summit of Governors (an annual meeting of governors and the Executive) chaired by the President. This has however caused fear among the ranks of governors. I wonder what is so secretive about attending a meeting which should be for the good of the counties?
The feeling among the deputy governors is that the Council of Governors has not been open.
In many counties, the "expected" harmonious working relationship between governors and their deputies has been disrupted by vested interests that often create divisions between the two county chiefs. This should worry us.
This was not expected at the time of the election. The argument that instead of giving each entity its own council or forum, an association of county governments should be formed cannot hold water. The county assembly is a separate branch of government and the executive cannot have the same avenue for sitting and holding dialogue with assemblies and speakers.
Otherwise their oversight role will become null and void. The two arms of government are separate and therefore they cannot form an association together. Probably a welfare association similar to the defunct Lapfund could be formed for the purpose of pension and social security.
Back to the Murkomen Bill. If passed, it would make it possible for deputy governors to undertake their constitutional mandate and make a positive contribution in the development of the counties.
Failure to enact this law, this position shall henceforth become a very unattractive office to vie for. Any candidate who intends to run for this may as well get prepared to become a spare wheel only to be used when a tyre bursts.
