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Kenyan farmers get bank loans via storage system

Kenya has launched Warehouse Receipt System (WRS) for farmers, which they could use to get loans of up to 65 per cent of the value of their produce

warehouse-AFOnce the farm produce is safe in the warehouse, the farmer can present the receipt given by the facility to the bank in search of a loan. (Image source: Gates Foundation/Flickr)

Under the WRS, the farmers could use their harvest stored in a certified warehouse as collateral to borrow money for agricultural activities.

Samuel Ndonga, head of agribusiness at Chase Bank Kenya, said, “Many banks in Kenya consider farmers as a high-risk group because their businesses are prone to many negative factors, including harsh weather, thus shun giving them loans.

“But with the WRS, commercial banks in the East African nation now have confidence to extend loans to farmers knowing that they cannot lose their money because the insured produce is safe in the warehouse.”

The bank gives out the money when the produce is in the warehouse.

“A farmer brings the original warehouse receipt, we contact the facility and approve 65 per cent loan of the value of his produce in two days,” stated Ndonga, noting that the interest rate averaged one per cent a month.


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