Establishing Franchised Market Resource Centres

KACE has embarked on franchising of MIPs and MICs into market resource centers (MRCs) to local private entrepreneurs to operate them on a commercial basis so as to improve access by poor smallholder farmers and other small and medium scale agro-enterprises (SMEs) to market information, market linkage and other relevant services. Four pilot MRCs were established in August 2006 and were officially launched on October 27, 2006: Chwele and Kimilili in Bungoma District, Cheptais in Mt. Elgon District and Mumias in Mumias/Butere District, all in Western Province of Kenya. Each MRC is a legally registered limited liability company under the Companies Act, Cap 486 of the Laws of Kenya, owned and operated by a Managing Director as its Chief Executive Officer.

In addition to market information and market linkage services, the franchised MRCs are developing a range of other services which are currently not available, or insufficiently so, but are beneficial to and in demand by poor smallholder farmers and their communities.  Examples are transport brokerage as this has been diagnosed as a major constraint in matching offers and bids by the smallholder farmers; warehousing / storage services often for short periods of time while the produce awaits sell at better prices the following market day; offering weighing services as there are virtually none available to smallholder farmers in markets; quality control services such as testing for grain moisture using moisture meters at the MRCs; selling genuine farm inputs (fertilizers, seeds) at affordable prices; brokering financial services to farmers by banks and micro-finance institutions; and providing email service to smallholder farmers as well as their communities in the remote rural areas in which they are located.

Notwithstanding all that, the franchised MRCs still perform the market price information service to KACE and maintain the bid-offer service for the produce from poor smallholder farmers.

The MRCs are designed to be financially self-sustaining after two years of operation, while providing affordable services targeted at the smallholder farmers and SMEs.  KACE oversees the activities of
the franchised MRCs to ensure that they develop services which are standardized, affordable and appropriate to the needs of poor smallholder farmers and their communities.

KACE provided capacity enhancement business training and technical assistance to the franchisees, and also offered them financial guarantees for start-up phase credit under a Rockefeller Foundation guarantee fund through a local bank – the K-Rep Bank. K-Rep Bank is a well established micro-finance institution that offers pro-poor financial services to rural enterprises in Kenya. KACE approached the K-Rep Bank and requested for their partnership in the franchising scheme. They agreed to the request given the financial guarantee fund provided by the Rockefeller Foundation to cover the risks to the bank arising out of the credit advanced to the franchisees for the start-up phase. Under an agreement with KACE, the K-Rep provided business training to franchisees, including the development and implementation of business plans and establishment of business accounting systems. The aim of this training was to equip franchisees with the necessary knowledge and skills to provide services to smallholder farmers and SMEs on sound commercial business lines and enhance the chances for their financial success.

The franchised MRCs are developing into one-stop shops for smallholder farmers and SMEs, stocking farm inputs and catalyzing e-commerce, thus helping to bridge the technology gap between remote rural areas and urban centers.