KENYA - Kenya has been ranked last in sub-Saharan Africa (SSA) in regulation of agricultural markets in a survey by the World Bank (WB).
A requirement that agricultural exporters pay annual licence fees pushed up the prices of Kenyan products in the global market hurting the country’s competitiveness and ranking in the survey, said the WB.
Globally, Kenya ranked only ahead of Myanmar and Sri Lanka in the survey of 40 countries.
“Markets indicators measure regulatory obstacles agribusinesses face in producing, marketing and exporting agricultural products, as well as the strength of plant protection measures,” reads the survey report.
Kenya scored a mark of 50.4 per cent, which was lower than the global average and behind its neighbours such as Uganda, Tanzania, Rwanda and Burundi.
The WB observed that anyone engaged in collecting, transporting, storing, buying or selling potatoes in Kenya for commercial ends must register with the Agriculture, Fisheries and Food Authority hindering entry of investors.
Tea exporters are also required to register annually with the Tea Directorate in the Ministry of Agriculture to obtain the right to export and be members of the East African Tea Trade Association to purchase the commodity at the Mombasa Tea Auction.
Kenyan farmers have also struggled to operate in some sectors of the local market that are dominated by brokers. It is difficult access some public market places without paying a “commission” to broker groups who dominate the market.
Private technology firms have come up with mobile phone platforms connecting farmers with end buyers in a bid to eliminate brokers.
Plans to establish a futures market are yet to materialise. The derivatives market is expected to help farmers in managing risks associated with fluctuating produce prices. The survey also looked at access to finance, machinery, seeds, fertiliser and transport.
Kenya performed above average in all the other parameters apart from access to fertiliser but it received commendation for lacking regulatory bottlenecks in importation of fertiliser.
Penetration of mobile money, uptake of agency banking and the presence of credit-only micro-financiers saw the country rank highly in finance.
Insurance firms started offering covering crop and animal production giving lenders confidence to extend loan facilities to farmers.
Kenya was also commended for regulations requiring installation of safety features on tractors and its facilitation of research in new seed varieties and the certification process.
The WB urged the use of ICT systems in the sector noting that cash had been made available for technology applications but nothing had been done on the ground.
The government was also asked to adopt the use of warehouse receipts to unlock cash for farmers immediately after harvesting their crops allowing them to hold on to the produce until prices improve.
Private firms such as the East African Grain Growers have taken up warehousing receipting.
Agriculture remains the key driver of the Kenyan economy contributing a quarter of the country’s gross domestic product.