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National Treasury
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Treasury seeks banks in Sh2.5bn rural credit guarantee scheme

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The National Treasury Building in Nairobi.

Photo credit: Pool

The National Treasury is seeking partner banks/financial institutions to implement a Sh2.5 billion ($20 million) rural credit guarantee scheme, which seeks to catalyse funding into agriculture value chains.

The rural credit guarantee scheme is a National Treasury project backed by the International Fund for Agricultural Development (IFAD) whose goal is to support rural and smallholder agriculture sector-led development by improving access to appropriate financial services.

The scheme mimics an existing credit guarantee scheme at the exchequer, which has been working to improve access to loans by micro, small and medium enterprises through innovations and partnerships including commercial banks.

The government through the exchequer and IFAD have invested Sh2.58 billion ($20 million) into the project via existing credit guarantee scheme and expect the partnership with financial institutions to yield in Sh10.3 billion ($80 million) to rural MSMEs and agriculture value chains.

“The Rural Kenya Financial Inclusion Facility (RK-FINFA) is seeking the services of financial intermediaries to participate in the implementation of the Rural Credit Guarantee scheme under the framework of existing credit guarantee scheme (CGs) under the National Treasury,” the exchequer said in a just published request for expression of interest.

Under the framework, financing from the facility is set to de-risk lenders, providing a partial guarantee for reimbursement of funds impaired during lending to the rural agriculture value chains.

Partner financial institutions are expected to demonstrate experience in lending to agribusiness enterprises.