$29mn financial sector IFAD loan for Kenya

A new $29.31mn loan and $0.6mn grant from the International Fund for Agricultural Development (IFAD) to the Republic of Kenya will provide better access to financial services, increase incomes, and improve production and outputs in the rural smallholder farm and off-farm sectors

The loan and agreement for the Programme for Rural Outreach of Financial Innovations and Technologies (PROFIT) were signed today in Rome by Her Excellency Josephine Wangari Gaita, Ambassador of the Republic of Kenya, and Yukiko Omura, Vice President of IFAD.

The financial sector in Kenya is vibrant and growing rapidly and there has been progress in poverty reduction over the last three decades. However, financial services are not being extended to the rural poor, due to the perceived high risks involved, and this is a major constraint in increasing smallholder incomes in the rural areas.

The PROFIT will implement structural changes required to improve the performance and sustainability of the rural financial sector by investing in new innovations and technologies. It will encourage the development of a range of tailored financial products, most importantly: savings and remittance services, value chain financing, medium-term financing for the agriculture sector and micro venture capital modalities, as well as provide technical support services.

PROFIT will be implemented throughout Kenya's rural areas, in particular in the arid and semi-arid lands and areas with agricultural potential and a high incidence of poverty. The programme will: help smallholder farmers, pastoralists, artisanal fishers, women, landless labourers and young people access a broad range of cost effective financial services institute systematic change in the commercial bank system to  allow for more investment in rural areas assist beneficiaries to effectively manage their assets, market their produce and increase employment opportunities.

To date, IFAD has financed 15 projects in Kenya for a total investment of $214.5mn directly benefiting 3,995,097 households.

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