Advertisement

East Africa grain farmers set to gain from lease, credit deals

Wednesday January 31 2018
shell

Workers shell maize at a farm in Uasin Gishu County, Kenya. Grain traders are set to benefit from a deal that will enable them lease post-harvest equipment and access financial advisory services. FILE PHOTO | NATION

By Allan Olingo

Stakeholders from the region's grain sector are set to benefit from a deal that will enable them lease post-harvest equipment and access financial advisory services.

The Eastern African Grain Council (EAGC) on Monday partnered with RentCo East Africa, an asset leasing firm, and Centerprise Africa, an advisory company, to offer EAGC members the services at preferential rates.

According to the EAGC Executive Director Gerald Masila, the pact will enable grain traders to get equipment and credit based on their unique business needs.

“Grain farmers and other enterprises in the sector often lack access to long-term credit needed to acquire equipment because they do not have the required collateral. Most assets they own cannot be used as collateral and are often non-existent and movable assets such as livestock and warehouse receipts which are not yet legally permissible as collateral,” Mr Masika said.

In the partnership, RentCo will own the equipment while allowing the lessee to use it in exchange for periodic payments.

“With simple documentation required, the leases will also be a means of acquiring equipment not just for its use but also for its ultimate ownership, which will be transferred to the lessee at the end of the lease period, automatically, or at a token price,” said Mr Henry Emuye, the chief operating officer of RentCo East Africa.

Advertisement

EAGC plans to set up a Fund to ease access to finance for its members through which Centerprise will offer transaction advisory services.

Mr Kefa Nyakundi, the managing director of Centreprise Holdings said that the firm and EAGC will work together to facilitate access to capital as well as capacity building in finance and risk management for the traders.

EAGC members are also set to enjoy substantial tax advantages — depending on the type of lease they choose. An operating lease for instance will allow traders deduct payments as operating expenses and gain a tax break.

Advertisement