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KCB eyes horticulture

By Michael Ouma

After putting up a sponsorship of Kshs 4 million for the 2010 edition of the annual Naivasha Horticultural Fair, also called Naivasha Horti Fair, East Africa’s largest bank in terms of assets, has increased the sponsorship to Kshs 4.5 million for this year’s edition of the expo.

The sponsorship, through which the bank aims to widen its footprint in all economic sectors as it continues its growth momentum across the East Africa region, will support the Fair which will be held from Friday 16 to Saturday 17 September at the Naivasha Sports Club.

In an interview with Horticultural News, Mrs Peninah Kimweli, KCB’s head of trade finance unit, said that the bank’s motivation to sponsor the Fair, for the second year running, is because the horticultural sector is a major foreign exchange earner for Kenya, coming in third in the country’s list of highest earners after tea and dairy sub-sector, and has a wide range of ancillary services in the value chain. “We have a product for every step of the horticulture value chain where we see opportunities for growth as we position KCB as the choice bank for the high-value sector”, Mrs Kimweli said.

The horticulture industry consists of various commodities- including fruits, vegetables, flowers, herbs, nuts and spices – and provides direct employment to over three million Kenyans while another 5 million are employed in related industries like packaging, chemicals and freight services, according to the Ministry of Agriculture.

According to figures from the USAID’s Kenya Horticulture Competitiveness Programme (KHCP), overall horticultural exports brought in Kshs 77.7 billion (US $ 944.6 million) in 2010 compared to Kshs 71 billion (US $ 888.2 million) in 2009, with the earnings being boosted by the then rising prices for foodstuffs.

KCB currently provides various financing solutions and services to exporters, greenhouse suppliers and input suppliers, with the services being infrastructure development loans, dollar overdrafts and working capital. Others are retail products for workers including ATM and internet banking services for those employed in the sector.

The horticulture industry comprises both small-scale enterprises (SMEs) and mid-corporates including the entire supply chain of transporters, input suppliers – like greenhouse suppliers, fertilizers, planting materials and cartons manufacturers. The bank aims to finance the entire supply chain though we are also aware of the fact that it is a high-risk sector characterized by perishable commodities – flowers and vegetables.

Even though horticulture is a volatile high-value industry which is occasionally affected by the changes in weather patterns, the bank sees huge potential in supporting the sector even in the face of the risks for various reasons.

“The Kenyan weather is ideal for flower growing throughout the year since most of our flowers are grown in the southern hemisphere. Our weather risk is thereby mitigated by targeting the greenhouse production more than open-shed grown floriculture unless one has borehole,” said Mrs Kimweli, adding that most of the country’s flower growing is technology-based which also mitigates most of the weather-related risks.

The only challenge, she said, was price volatility including transfer pricing service offered to exporters.

“Price volatility and fluctuation has been our major problem since banks rely on financials to appraise the borrowing capability of the customer. This can only be mitigated though negotiated contract pricing offered to growers by exporters,” stated Kimweli.

She added that the bank is positioning itself to offer a whole range of products and services to the vegetable and horticultural exporters through its currently financing with SME and retail products.

The Naivasha Horticultural Fair was started in 2002 to bring together exhibitors and visitors in a spacious and pleasant environment at affordable prices. The Fair is run by a group of volunteers and proceeds go to fund activities and initiatives of local and national charities with a focus on, but not limited to, caring for woman and children.

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