The Ministry of Investments, Trade and Industry, and International Finance Corporation (IFC) have signed a Cooperation Agreement to provide technical support aimed at bolstering the adoption and uptake of the Warehouse Receipt System (WRS) in Kenya.
The project is supported by the Embassy of the Kingdom of the Netherlands in Kenya. The primary objective of the project is to strengthen the legal, regulatory and operational framework of Kenya’s Warehouse Receipt System (WRS) with the aim of boosting warehouse receipt financing and increasing private sector participation and investments in the system.
“The Government is currently engaged in an aggressive campaign to increase food production under the fertiliser and seed subsidy programme, and WRS will help ensure this happens through provision of quality storage and certified warehouse facilities once farm produce is harvested,” State department for Trade Principal Secretary (PS) Alfred K’Ombudo said on Tuesday.
The PS further noted that 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 greatly uplift the living standards of especially women and youth at the grassroots level in line with the Government’s ‘Bottom-Up’ Economic Transformation Agenda,” he said.
Kenyan farmers have long grappled with food insecurity, post-harvest losses due to poor storage, aggregation and post-harvest handling, limited access to markets, lack of effective and transparent price discovery mechanisms through a commodity trading platform, and lack of affordable credit. A strong warehouse receipt system helps address these challenges.
The goal of the system is to enhance access to certified safe and quality storage facilities under licensed professional warehouse operators who charge affordable storage fees. This will in turn result in the growth of the agro-processing and value addition industries as agro-processors will now have access to consistent quality and quantity commodities that will ensure effective utilization of their processing capacities.
Farmers and aggregators across the country can deposit their agricultural commodities in certified warehouses, in exchange for a Warehouse Receipt (WR) which can be traded, sold, exchanged or used as collateral to obtain bank loans.
Kenya’s Warehouse Receipt System covers the entire process of depositing commodities in a licensed warehouse, 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 includes, but is not limited to, the regulation of warehouses operators and actors associated in the processes.
The project is estimated to cost USD 2,300,000 and expected to be completed by December 2025, and involves three key areas of work.
The first project component is to develop the regulatory framework and administrative instruments needed to govern the Warehouse Receipt System. Second, will be 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 in partnership with the Media Council of Kenya to increase awareness of the warehouse receipt system amongst the public and boost participation in the Warehouse Receipt System.
Fourth, the project will also support capacity building for the WRS Council, financial institutions, farmers, and other warehousing value chain players. This support will include warehouse operators, management companies, post-harvest management solution providers, and others. 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.
“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.
By Joseph Ng’ang’a
