KENYA AGRICULTURE CREDIT EVALUATION

PROJECT WAS MODIFIED IN 1976 TO SPECIFY SMALL FARMERS. THE AFC IS NOW THE PRIMARY CREDIT INSTITUTION IN KENYA. AGRICULTURAL PRODUCTION HAS INCREASED, AND EXPORTS OF AGRICULTURAL PRODUCTS, ESPECIALLY TEA AND COFFEE ARE AT HIGH LEVELS, IMPROVING THE FARMERS' AND BANK 'S LIQUIDITY POSITION. THE AFC HAS A BASE STAFF AND BRANCH OFFICES FOR AN EXPANDED CREDIT PROGRAM. APPROX 70% OF AFC LOANS BY NUMBER AND 30% BY AMOUNT ARE CURRENTLY EXTENDED TO SMALL FARMERS AS DEFINED BY AFC. EVALUATOR CONTENDS THAT AFC'S OPERATIONAL DIFFICULTIES,AS OUTLINED IN A JUNE 1977 MANAGEMENT STUDY, STEM FROM RAPID GROWTH IN LENDING TO SMALL FARMERS WITHOUT ADEQUATE PROGRAMS FOR FARMER CREDIT EDUCATION, LOAN APPROVAL PROCEDURES, LOAN SUPERVISION AND CREDIT REVIEW FUNCTIONS. EVALUATOR RECOMMENDS AUGMENTING MANAGEMENT STAFF WITH A DEPUTY GENERAL MANAGER, AN ASSISTANT FOR ADMINISTRATION, AND ADDITIONAL COORDINATING OF AREA MANAGER. CONTINUED SUPPORT OF AFC AT THE PRESENT LEVEL IS RECOMMENDED, WITH PARTICIPANT TRAINING DIRECTED TOWARD ACCOUNTING, AUDITING, PERSONNEL, RESEARCH AND PLANNING, AND MANAGEMENT. EVALUATOR RECOMMENDS THAT AFC EMPHASIZE CREDIT TO THE COMMERCIAL SECTOR OF AGRICULTURE ON A COLLATERAL BASIS. SMALL FARMER CREDIT COULD BE PROVIDED UNDER CLOSE SUPERVISION, WITHIN THE STRUCTURE OF KENYAN AGRICULTURAL COOPERATIVES. AN INFORMAL MERGING OF THE SMALLHOLDER PRODUCTION SERVICES AND CREDIT PROJECT AND THE INTEGRATED AGRICULTURE DEVELOPMENT PROJECT WOULD COMBINE THE SKILLS OF ADVISORS PRESENTLY INVOLVED IN THESE PROGRAMS. EVALUATOR RECOMMENDS THE MINISTRY OF COOPERATIVE DEVELOPEMNT AS THE ADMIN BODY OF A CENTRALIZED CREDIT OPERATION, AND INCREASED FUNDING BY THE GOVT OF KENYA FOR TRAINING, SUPERVISION AND EDUCATION OF SMALL FARMER LOAN SUPERVISORS. TECH ASSIST IS RECOMMENDED FOR THE COOPERATIVE BANK OF KENYA. ALSO RECOMMENDS ESTABLISHMENT OF A REGIONAL INSTITUTE FOR PROVIDING SPECIALIZED TRAINING IN AGR CREDIT TO THE DEVELOPING AFRICAN COUNTRIES.