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COVID-19: Regulatory Measures Could Widen Kenya’s Financial Access Gap

If the new regulations by the Central Bank of Kenya put microfinance institutions under stress, low-income households’ will be unable to access credit, and their ability to maintain livelihoods will be affected.

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Covid-19: Regulatory Measures Could Widen Kenya’s Financial Access Gap
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Kenya’s financial inclusion has drastically improved in the last couple of years through development in the financial sector. Mobile money has been a key driver in narrowing the financial access gap in Kenya.

According to FSD Kenya, M-Pesa, Safaricom’s mobile money platform, is said to have lifted 2% of Kenyans out of poverty.

The impact is more significant in female-headed households, which had previously been limited in accessing financial services due to cultural restrictions. Financial access growth has reduced the gender gap from 13% to 6%.

Source: 2019 FinAccess Household Survey

Source: 2019 FinAccess Household Survey

Mobile money has been the main financial service used by all socio-economic groups in Kenya. It has prompted the entrance of several private investors into Kenya’s credit market as the demand for quick, small loans has been growing rapidly. In the first quarter of 2020, loan accounts in Kenya increased by 21% compared to the last quarter of 2019. About 92% of these accounts were mobile loans. Another common source of finance for Kenyans, especially the lower-income groups has been chamas. These groups offer loans to members at about 1% per month.  Mobile loans and chamas have been falling through the cracks of formal lending systems, providing the lower-income groups with capital to pay school fees, do farming, expand their businesses and meet daily expenses.

Reasons for taking credit

Source: 2016 FinAccess Household Survey

Source: 2016 FinAccess Household Survey

Financial options for the poor are falling flat…

The financial services used by Kenya’s most vulnerable groups are mobile money, informal groups, banks, insurance (mostly NHIF) and digital loans.

Source: 2019 FinAccess Household Survey

Source: 2019 FinAccess Household Survey

Luckily, the low-income groups can still comfortably use mobile money, especially since the Central bank extended the waiver of M-pesa fees for transactions equal to or below Kshs 1,000. However, they are unable to access mobile loans. In April, when the Central Bank of Kenya barred mobile lenders from forwarding the names of loan defaulters to credit reference bureaus (CRBs) and stopped the blacklisting of borrowers owing less than Kshs 1,000, most mobile loan companies ceased loan disbursements and focused on getting repayments from the funds disbursed pre-COVID-19.

Usually, SACCO customers are mainly denied credit on account of failure to clear outstanding loans. Mobile money, mobile banking and digital loan apps providers deny customers credit on a bad or no credit history. Lower-income groups are the majority who make up Kenya’s informal sector or part-time workers in the formal sector who were the first to be culled from the workforce because of the economic impact of COVID-19. Many have been unable to repay their loans, and financial institutions are avoiding taking up more risks by lending to this consumer segment.

Reasons for being denied credit by the institution in 2019

Source: 2019 FinAccess Household Survey

Source: 2019 FinAccess Household Survey

Low-income groups lack the financial cushion of adequate savings and have had to find new ways to survive

For those using informal groups to access finance, the main reason for being denied credit is usually low savings. In the first few weeks of the COVID-19 outbreak in Kenya, low-income groups depleted their savings, and now members of these informal groups are unable to raise their monthly contributions.

As financial services appear to have fallen flat, Kenya’s low-income groups have resorted to selling their assets, skipping meals, looking for a new start in their rural homes, amongst other measures they are taking to survive.

Microfinance institutions and mobile loan companies now face threats to their own existence. These institutions do not have a fall back market, as they rely solely on their shareholders or depositors. The commercial nature of these companies puts a heavy amount of pressure on borrowers who pay very high annualised interest rates of over 130%. If left unregulated, these players can end up increasing poverty. Some households have reported being much more afraid of their inability to repay their debt to these institutions than they are of the coronavirus.The Central Bank has stepped in to help borrowers by supervising digital lending for the first time. It has proposed a law that will see it regulate monthly interest charged by the mobile loan companies and borrowers’ non-performing loans.

Whereas the new regulations would protect borrowers, there’s another side to the coin. If the new regulations by the Central Bank of Kenya put microfinance institutions under stress, low-income households’ will be unable to access credit, and their ability to maintain livelihoods will be affected. There needs to be a delicate balance of measures put in place through a collaborative effort between international donors, financial institutions and the government. Stakeholders need to not only create adequate consumer protection legislation but also implement measures that will sustain microloan services to Kenya’s most vulnerable.

This article was first published by Africa Uncensored’s Piga Firimbi.

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Patricia Andago is the product development lead at Odipodev, a data science and analytics firm operating out of Nairobi Kenya.

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Punitive Government Policies Jeopardise Kenya’s Food Security

The government is criminalising Kenyan farmers and leaving the country’s food security at the mercy of multinational corporations.

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Punitive Government Policies Jeopardise Kenya’s Food Security
Photo: Adrian Infernus on Unsplash
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By 2021 your typical Kenyan smallholder farmer was producing 75 per cent of the foods consumed in the country. Yet the draconian laws imposed on the agriculture sector by the government have been facilitating their exploitation by private sector actors including multinational corporations. This is in total contradiction with President Uhuru Kenyatta’s move to include food security in his Big Four Agenda and begs the question of how the country can achieve food security when farmers are discouraged from producing food by these punitive laws.

Recently, there was an uproar on social media regarding the Livestock Bill 2021. The point of contention in the yet to be gazetted Bill is a clause that bars Kenyan farmers from keeping bees for commercial purposes unless they are registered under the Apiary Act. The government, through the Permanent Secretary for Livestock Mr Harry Kimutai, tried to justify this by saying that the aim of registering beekeepers is to commercialise beekeeping instead of it being a traditional practice.

Local pastoralist, agrarian and forest-dwelling communities have practiced beekeeping since time immemorial and it has been part of the subsistence economy of smallholder farmers who pass on this rich knowledge and expertise from generation to generation.

Bee-reaucracy

In its current form, the Livestock Bill 2021 will drive smallholder beekeepers out of honey production and pave the way for multinational corporations under the guise of regulating the sector. It is no different from the Agricultural Sector Transformation and Growth Strategy 2019-2029 that seeks to move farmers out of farming into “more productive jobs”, opening the door for their exploitation and impoverishment by agro-capitalists.

In a recent media interview, Mr Kimutai said that Kenyan honey is contaminated with pesticide residues. But if the government is indeed concerned about improving honey production, it should start by banning the use of toxic pesticides that are detrimental to bees and contaminate the quality of honey. Pesticides such as Deltamethrin have been found to be toxic to bees yet they are still used in Kenya.

Local pastoralist, agrarian and forest-dwelling communities have practiced beekeeping since time immemorial.

Section 93 subsection(1) of the Bill bars the importation, manufacturing, compounding, mixing or selling of any animal foodstuff other than a product that the authority may by order declare to be an approved animal product. This offence attracts a fine of KSh500,000 or imprisonment for a term not exceeding 12 months, or both.

Smallholder livestock farmers in Kenya have been growing “napier grass” to feed their cows and for sale to other farmers. Do these new regulations mean that they shall be committing an offence by growing their own feed and selling it within their localities?

Another punitive regulation is the Crops (Irish Potato) Regulations 2019, that requires transporters, traders and dealers to be registered with their counties, failure to which they face up to KSh5 million in fines, three years imprisonment, or both. This regulation also punishes an unregistered farmer with a one-year imprisonment or KSh500,000 or both, for growing a scheduled crop. It is no coincidence that capitalist-funded organisations like Alliance for a Green Revolution (AGRA) applaud the Irish Potato regulations as a new dawn for Kenyan farmers.

Bee-reaucracyThrough the Seed and Plant Varieties Act 2012, the government once again fails to protect farmers from capitalist exploitation. Part 1 of the Act defines selling as including barter, exchange and offering or exposing for a product for sale, taking away a farmer’s right to sell, share and exchange seed, a right that is recognised in the constitution.

Part 2 section 3 of the Act prohibits the sale of uncertified seed. The good old practice of selling and sharing seeds is further criminalised in section 7(5) which requires only seed appearing in the Variety Index or the National Variety List to be sold. This limits farmers from selling their varieties which they have been sharing, exchanging and selling for generations. Moreover, this automatically means that farmers selling their seed varieties are committing an offence if such varieties are not listed in the index.

Further, section 18 part 4 of this act allows for the discovery of a plant variety whether growing in the wild or occurring as a genetic variant, whether artificially induced or not. This section allows for the discovery of farmers’ indigenous seeds by multinational corporations keen to patent them for profit.

It is no coincidence that capitalist-funded organisations like Alliance for a Green Revolution (AGRA) applaud the Irish Potato regulations as a new dawn for Kenyan farmers.

The implication here is that since farmers’ seed varieties are not registered or owned by anyone, anybody can obtain the seeds of any crop variety, apply for their registration and claim their “discovery”. Farmers who have been conserving and reusing the “discovered” seeds will then lose the right to continue doing so and they will be required to pay royalties to the new “owners” of these seeds.

This act contravenes certain provisions of the constitution, in particular Article 11 (3) (b) of the Kenya Constitution 2010 which states that parliament shall enact legislation to recognise and protect the ownership of indigenous seeds and plant varieties, their genetic and diverse characteristics and their use by the communities of Kenya.

Foreign laws

The parliament has forfeited its obligation to enact laws that protect and enhance our intellectual property rights  over the indigenous knowledge of the biodiversity and the genetic resources of Kenyan communities  as mandated by Article 69 (1) (a) of the Kenyan constitution. It has allowed external actors to pirate local resources and trample indigenous rights.

Patenting indigenous seeds, barring farmers from keeping bees, and regulating the growing and selling of animal feed and potatoes is theft of the commons. The government is in cahoots with large corporations determined to kill the smallholder farmers’ sources of livelihood while singing about food security being part of the Big Four Agenda.

Foreign lawWhat sense does it make to frustrate smallholder farmers who grow 75 per cent of our food to serve the interests of imperialist multinational corporations keen on holding our farmers at ransom through abhorrent fines?

Patenting indigenous seeds, barring farmers from keeping bees, and regulating the growing and selling of animal feed and potatoes is theft of the commons.

It is time to reclaim and protect the commons that our communities have for a very long time thrived on. In her book Reclaiming the commons Dr Vandana Shiva points out that indigenous communities, including farmers, co-create and co-evolve biodiversity with nature, practises that have seen them overcome ecological challenges for generations. Our policies, plans and laws need to protect these practices for posterity.

Our parliamentarians should endeavour to defend our biodiversity, indigenous cultures and national systems – reclaiming the commons. We need policies that will allow farmers to produce food using indigenous seeds that are readily available and that they can be share amongst themselves. We need policies that will allow farmers to produce safer and more healthy food in an environmentally safe way, not punitive policies designed to eliminate farmers and have our food system controlled by corporations out to make profits at the expense of our health and our environment.

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Tech Disruption in the Agricultural Sector

The future of farming in Kenya counties, whether in knowledge sharing, collaborations, funding, or market access primarily lies in the farmer’s abilities to harness the respective strengths of the available and emerging Disruptive Agricultural Technologies. As the tech-platforms become cheaper, more available and affordable farmers yield and fortunes will likely inch upwards.

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Tech Disruption in the Agricultural Sector
Photo: Tyler Mullins on Unsplash
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Disruptive technologies in agriculture (DATs) have been in Kenya since the early 1900s and can simply be defined as the digital and technical innovations that enable farmers and agri-firms to increase their productivity, efficiency, and competitive edge.

These platforms essentially help local farmers make more precise decisions about resource use through accurate, timely, and location-specific price, weather predictions. The agronomic data and information that they provide in Kenya is becoming increasingly important in the context of climate change. Besides, leveling the playing field, it can make small-scale or local marginalized farmers in Kenya to be more competitive.

Sophisticated off-line digital agri-tech can provide opportunities even in poorly-connected rural contexts, or with marginalized groups who have lower access to information and markets. In short, Disruptive Agricultural Technologies (DATs) are overturning the sector status quo.

Tech Disruption in the Agricultural Sector

Some of the key disruptive technologies in agriculture (DAT’s) include Waterwatch Cooperative in Kenya (Real-time alert system), Tulaa and Farmshine (Digital platform for finding buyers and linking buyers and sellers).

There is also Agri-wallet (platform for input credit/e-wallets/insurance products), dutch-based Agrocares operating in Kenya and Ujuzi Kilimo (portable soil testers, satellite images, remote sensing) as well as SunCulture (solar-powered irrigation pumps)

These platforms have helped to facilitate access to local markets in counties such as Makueni and West Pokot, improve nutritional outcomes, and enhance resilience to climate change. Disruptive agricultural technologies are designed to help stakeholders by reducing the costs of linking various actors of the agri-food system both within and across countries through faster provision, processing, and analyzing of large amounts of data.

The Disruptive Agricultural Technologies Landscape 

Over 75% of Disruptive Agricultural Technologies are digital. The remaining 25% of non-digital are either focused on energy (solar), or producers/suppliers of bio-products for agriculture.

Approximately 32% of the Disruptive Agricultural Technologies aim to enhance agricultural productivity, 26% are working to improve market linkages, 23% are engaged in data analytics, and another 15% are working on financial inclusion.

According to a 2019 World Bank report, Kenya has become a leading agri-tech hub with nearly 60 scalable Disruptive Agricultural Technologies (DATs) operational in the country, followed by South Africa and Nigeria. Kenya is said to have the third largest technology incubation and acceleration hub in the region. Examples of those technologies in Kenya include: Data-connected devices which use ICT to collect, store, and analyze data. This includes GPS, machine learning, and artificial intelligence. The Africa’s Regional Data Cube hosted in Nairobi,Kenya is a tool that helps various countries address issues related to agriculture, water, and sanitation. 

The use of robotics and automation in farming in Kenya has gained widespread acceptance. For instance, drones are used to monitor and improve the efficiency of agricultural operations and its usage is governed by the Civil Aviation Act.

Majority of farmers in Kenya are smallholder farmers and having access to Disruptive agricultural technologies helps even the competition with medium and large scale farmers as tools are created for both low and high connectivity areas.

Over 83 percent of Disruptive agricultural technologies are e-marketplaces that do not require high connectivity. Example is Twiga Foods whose digital platform connects retailers and food manufacturers, delivering a streamlined and efficient supply chain.

Kenya’s financial sector is characterized by a robust mobile money ecosystem (MPESA) with over 70 percent of the population using mobile money regularly which increases its potential for farming for smallholder farmers.

Despite that one of the biggest challenges facing the agriculture sector in Kenya is access to finance. This is largely due to the high risk of loaning to small holder farmers. FinTech apps use alternative data and machine learning to improve the credit scoring of smallholder farmers.

These apps help minimize the gap between the demand for credit and the supply of financing for smallholder farmers. Kenya is a hotspot for agricultural apps. There are numerous organizations working on developing digital solutions that combine precision farming with remote sensing data.

Connectivity and Adoption of DATSs

A significant number of the existing digital tools and technologies can be utilized in areas with low network to improve the productivity of the agriculture sector. Despite the increasing number of mobile phone users in Kenya, the penetration rate among smallholder farmers remains relatively low.

It may be difficult for many of these smallholder farmers to adopt Disruptive agricultural technologies (DATs) due to the high costs, complexity and capabilities required. Meanwhile for large scale farmers, the DATs highly boost their productivity, especially if they have already developed the capabilities in-house to accelerate adoption of these tech platforms. Therefore, from the onset, we need to understand who uses the technology and the implications of this.

Kenya has a well-established start-up ecosystem, made up of mostly young, adaptive and brilliant innovators who are leveraging low-cost digital platforms. This is coupled with funding from international donors and incubation activities address agricultural value-chain issues. There is a mix of actors for Disruptive agricultural technologies depending on the categorization of the technology.

This ranges from DATS that support creation, facilitate adoption and oversee diffusion of innovation.

These actors need strong and cohesive ties, both between, the regulatory bodies, farmers, county leaders, financiers, state agencies, and fellow developers. The nature of the collaborations could be cohesive and cooperative, where all the local actors have shared goals, to fragmented, where not all actors are on board, causing resistance and slowing down the process.

Despite a myriad challenges these radical and innovative (DATs) are revolutionizing and changing the farming landscape in the counties and working with the Ministry of Agriculture using technologies to deliver agricultural services more efficiently and accountable.

The future of farming in Kenya counties whether in knowledge sharing, collaborations, funding, or market access primarily lies in the farmer’s abilities to harness the respective strengths of the available and emerging Disruptive Agricultural Technologies. As the tech-platforms become cheaper, more available and affordable farmers yield and fortunes will likely inch upwards.

This article is part of The Elephant Food Edition Series done in collaboration with Route to Food Initiative (RTFI). Views expressed in the article are not necessarily those of the RTFI.

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Revealed: Majority of US Voters Support Patent Waiver on COVID-19 Vaccines

Shock poll reveals majority support for Joe Biden to suspend TRIPS and support global vaccination.

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Photo: Hakan Nural on Unsplash
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A new poll finds that 60% of US voters want President Joe Biden to endorse the motion by more than 100 lower- and middle-income countries to temporarily waive patent protections on Covid-19 vaccines at the World Trade Organization. Only 28% disagreed.

The survey, carried out by Data for Progress and the Progressive International, shows a super majority of 72% registered Democrats want Biden to temporarily waive patent barriers to speed vaccine roll out and reduce costs for developing nations. Even registered Republicans support the action by margin of 50% in favor to 36% opposed.

The new polling shows that “there is a popular mandate from the US American people to put human life and economic recovery ahead of corporate profits and a broken intellectual property system,” said David Adler, the general coordinator of the Progressive International. Burcu Kilic, research director of the access to medicines program at Public Citizen and member of Progressive International’s Council, called on Biden to “listen to Americans who put him in power” and “do the right thing.”

Revealed: Majority of US Voters Support Patent Waiver on COVID-19 VaccinesDue to WTO intellectual property rules, countries are barred from producing the current leading approved vaccines, including US-produced Moderna, Pfizer and Johnson & Johnson. In October of 2020, South Africa and India presented the WTO with a proposal to temporarily waive these rules for the duration of the pandemic so that vaccines can be manufactured across different countries, increasing their availability, reducing their cost and ensuring that they are delivered to everyone on earth as quickly as possible.

In the absence of the waiver, the current manufacturing and distribution rates are unlikely to stem the pandemic’s momentum, especially as new variants, which are more infectious and seem to evade the acquired immunity from prior infection or from the current vaccines, continue to emerge. The US under President Trump joined other richer nations to block them.

The shock poll reveals a level of public support for intellectual property waivers that will likely add to growing congressional pressure on Biden to join those pushing to save lives through a global vaccination drive. Congresswoman Jan Schakowsky is working on a letter to the president to which Schakowsky says more than 60 lawmakers have added their signature, including House Speaker Nancy Pelosi.

Senator Bernie Sanders, Chair of the Senate Budget Committee, responded to the poll saying the US should be “leading the global effort to end the coronavirus pandemic.” According to Sanders, “a temporary WTO waiver, which would enable the transfer of vaccine technologies to poorer countries, is a good way to do that.”

Responding to the new poll, Representative Ilhan Omar called on Biden to “support a waiver to boost the production of vaccines, treatment and tests worldwide,” arguing that it was “not just an issue of basic morality, but of public health.”

Adler argues, “US Americans know rigged rules to prop up big pharma’s profits are not in their interest. The longer the virus has to spread, the more it can mutate and become vaccine-resistant. Covid-19 anywhere is a threat to public health and economic wellbeing everywhere. If intellectual property restrictions are not lifted, the pandemic will go on for longer, killing more people and damaging more livelihoods.”

The threat to the Global South from vaccine apartheid is a “death sentence for millions around the world—and it is because giant pharmaceutical corporations would rather maximize profit than provide vaccines to people who need it,” according to Omar.

Sanders agrees, saying “the bottom line is, the faster we help vaccinate the global population, the safer we will all be. That should be our number one priority, not maximizing the profits of pharmaceutical companies and their shareholders.”

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