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  • on 10.03.2015
  • at 04:01 PM
  • by Kevin Hind

EAX, ABC bank eye grain farmers with loans deal 0

ABC Bank and the East Africa Exchange (EAX) have signed a deal that will make it easier for farmers to borrow through the use of warehouse receipts. Farmers who supply maize and other grains to stores certified by the EAX will be given electronic warehouse receipts which will indicate the quantity and quality of grains that have been delivered.

Farmers can then present the electronic receipts as collateral for borrowing, similar to the way title deeds and logbooks are used as security for loans.

The electronic receipts give farmers the choice to sell their grain deliveries at a later date when the market is favourable rather immediately.

Should the farmers have pressing financial needs they can borrow from banks using their produce as collateral as indicated in their warehousing receipts.

ABC Bank is also expected to provide clearing and settlement services and payment solutions that include mobile money transfer services.

This method of transaction means farmers can then sell their produce when prices are high, pay back the loans and pocket the difference.

ABC Bank said the system would create price stability in the market which will mostly benefit small-scale farmers who do not have the financial muscle to better negotiate with buyers.

“Smallholder farmers are particularly affected owing to their vulnerability to price fluctuations and their weak bargaining position. With warehouse financing solutions like this, they will now be at a vantage point to bargain for better prices for their produce, thereby enhancing their capacity to produce more, create employment and contribute more to economic development,” said ABC Bank chief executive Shamaz Savani.

Continue Reading on: The East African

by John Gachiri

Photo Credit: Nationa Media Group

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