Government has shelved plans to establish a farmer’s bank, which farmers thought would address the thorny issue of reluctance by main stream banking institutions to lend to the sector. 

Government is instead looking at ways of encouraging the existing financial institutions to avail farmers more credit to boost productivity in the agriculture sector.

The history of loan disbursement by commercial banks to the agriculture sector is worrying, and should be addressed if the country’s development objectives are to be realized.

Access to credit in agriculture sector should be prioritized and banking institutions should look at more ways of supporting the sector which employs over 80% of the population.

According to the sectoral loan disbursement for 2015, only 1.9 per cent of total loan portfolio went to agriculture, a marginal increase from 1.3 per cent in 2014. The loan rejection rate was at 49 per cent in 2015, according to central bank statistics. In 2014, 58 per cent of the agriculture loan applications were rejected.

But this trend must change if the government target of 8.5 per cent growth rate for the agriculture sector by 2018 is to be met. The sector’s growth stagnated at 5 per cent between 2014 and 2015.

Despite the current efforts , more can be done to ensure that more farmers are competitive enough to qualify for credit from banks. Individual farmers who are into commercial farming should ensure that they keep books of accounts and ensure that they run the projects like a business that is bankable.

Farmers must embrace working in cooperatives to have a bigger bargaining power when it comes to mobilizing resources. Certainly more ways have to be devised by the relevant stakeholders’ to ensure that the agriculture sector gets more share of credit given out by commercial banks.