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USD 10 Million in Agricultural Finance Support Youth Entrepreneurs

George Mbithi - September 12, 2021 - 0 comments

By Gladys Siamanda

In Kenya, the average age of a farmer is 61. In a country where 75% of the total population is below 35, it is concerning that only 10% of youth are directly participating in the agriculture sector. With youth unemployment in Kenya at 38.1%, agriculture presents a viable business opportunity for Kenya’s unemployed youth to create a livelihood. This is possible due to the sector’s wider labor absorptive capacity which is currently at about 40%, according to The World Bank.

Agriculture presents a viable option for young people to earn a living and contribute to economic developement in Kenya. Photo: SunCulture

The dismal number of youths involved in agribusiness can be attributed to many factors. First is the limited access to land. In Kenya, land is largely owned by the elderly. At the same time, it is an important form of collateral in agricultural financing. This means that many ambitious and productive young people are systemically locked out of access to capital for investment in agricultural enterprises. Lack of title deeds, assets, and sound credit histories position young people as credit risk, undermining their prospects to improve their lives and livelihoods.

Another impediment is the lack of sound financial information and operation systems within youth-owned agribusinesses. For many youths, especially those in rural areas, the lack of accounting systems, and business plans is reason enough to be denied access financing. Many youths also tend to be uninformed about FIs’ requirements and lack the technical capacity to formalize their business operations. All these factors work to discourage youth from considering agribusiness as a viable means to gain self-employment, let alone it is HARD work.

USAID’s Kenya Investment Mechanism is addressing these pressing needs by deliberately targeting youth economic development in agribusiness. Under its business development services model, KIM has partnered with business advisory service providers who have built the capacity of youth-owned businesses, supporting them to become credit-worthy and investable.

KIM has supported more than 40 youth-owned enterprises to mobilize over USD 10 million. This financing has enabled these enterprises to expand, improve their performance, increase profits, and create new employment opportunities for youths.

Gladys Siamanda is a Monitoring and Evaluation Consultant at USAID’s Kenya Investment Mechanism.

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