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New agreement to improve the Warehouse Receipt System in Kenya

The Ministry of Investments, Trade and Industry and IFC signed a Cooperation Agreement to provide technical support aimed at strengthening the adoption and uptake of the Warehouse Receipt System (WRS) in Kenya, a project supported by the Embassy of the Kingdom of the Netherlands in Kenya. The primary objective is to bolster the legal, regulatory, and operational framework of Kenya’s WRS to increase private sector participation and investments and boost warehouse receipt financing.

Kenyan farmers face many challenges such as food insecurity, post-harvest losses due to poor storage and handling, limited market access, lack of effective and transparent price discovery mechanisms, and lack of affordable credit. A strong warehouse receipt system helps address these challenges by enhancing access to certified safe and quality storage facilities under licensed professional warehouse operators who charge affordable storage fees. This will result in the growth of the agro-processing and value addition industries and ensure effective utilization of processing capacities.

Under the WRS, farmers and aggregators across the country can deposit their agricultural commodities in certified warehouses, receiving a Warehouse Receipt (WR) that can be traded, sold, exchanged, or used as collateral to obtain bank loans. The system covers the entire process of depositing commodities in licensed warehouses, including the issuance of a warehouse receipt reflecting the quantity and quality of the deposited commodity, the management of the transfer of the receipt as a document of title, and the regulation of warehouses operators and actors associated with the processes.

The project, estimated to cost USD 2,300,000, is expected to be completed by December 2025, and involves five key areas of work. The first component is to develop the regulatory framework and administrative instruments needed to govern the WRS. Second, the implementation of the central registry for the management of warehouse receipts. Third, the partners will design and finance a development dialogue series that brings together various private and public sector stakeholders to increase awareness of the warehouse receipt system and boost participation. Fourth, the project will support capacity building for the WRS Council, financial institutions, farmers, and other warehousing value chain players. Finally, the project will also support the development of a pipeline of bankable investments in the sector for private sector investment.

IFC will provide technical assistance to develop and review institutional instruments such as administrative procedures orders, service level agreements, and standard operating procedures to govern the WRS Council.

Key areas of work in the Warehouse Receipt System (WRS) project:

ComponentDescription
Regulatory framework and administrative instrumentsDevelop the regulatory framework and administrative instruments needed to govern the WRS
Central registryImplement the central registry for the management of warehouse receipts
Development dialogue seriesDesign and finance a development dialogue series that brings together various private and public sector stakeholders to increase awareness of the warehouse receipt system and boost participation
Capacity buildingSupport capacity building for the WRS Council, financial institutions, farmers, and other warehousing value chain players
Bankable investmentsSupport the development of a pipeline of bankable investments in the sector for private sector investment

What they said:

“The Government is currently engaged in an aggressive campaign to increase food production, and WRS will help ensure this happens through provision of quality storage and certified warehouse facilities once farm produce is harvested,” said Trade Principal Secretary Alfred K’Ombudo.

The receipt reflects the quantity and quality of the commodity deposited at a certified warehouse and is transferable and negotiable hence can be used as collateral to secure credit for the farmers or cooperatives, and traders. This will uplift the living standards of especially women and youth at the grassroots level in line with the Government’s ‘Bottom-Up’ Economic Transformation Agenda.

“The support by the Ministry of Investments, Trade and Industry and IFC will allow the Warehouse Receipt System Council to accelerate adoption of WRS across the agricultural value chains from the momentum already created that will result in a structured commodities trading system, increased financial inclusivity, aggregation by smallholder farmers, access to quality storage facilities and boosting agricultural production in line with the government’s priorities,” said Samuel Ogola, WRS Council Ag CEO/ Registrar.

“By enhancing the policies and procedures around Kenya’s Warehouse Receipt System, IFC hopes to grant farmers better storage facilities, enable them to fetch fair prices for their commodities and access credit for growth, thereby uplifting thousands of farmers. Participation and investment from the private sector will be key to truly unlocking the benefits of the warehouse receipt system in Kenya,” said Amena Arif, IFC Country Manager for Kenya.

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