Enactment of Warehouse Receipt Systems (WRS) Bill - Eastern Africa Grain Council (EAGC)

Trade in staple food commodities, particularly cereals and pulses, is largely unstructured. A crucial element of a structured trading system is an effective Warehouse Receipt System (WRS). WRS is a system that promotes aggregation of staple food commodities in economically viable quantities, it reduces transaction costs along the value chain, rewards high-quality production of food crops and allows farmers to obtain credit facilities from banks through WRS financing.

EAGC has been championing structured grain trading since its inception and has been driving the WRS in Kenya since 2008 relying mainly on the law of contract in the absence of specific WRS legislation to govern relationships between parties and transactions amongst them.

In 2010 the Government of Kenya initiated the process of developing a suitable WRS Bill. This Bill was tabled in the National Assembly in 2015. According to EAGC, the 2015 WRS Bill had a number of flaws which would have made the proposed WRS system impossible to implement.

in July 2015 EAGC undertook advocacy for the improvement of the Warehouse Receipt System Bill 2015 which was successfully amended to a substantial extent and passed by the National Assembly in August 2016. The Bill was consequently tabled at the Senate in October 2016 because WRS involves regulation of an agricultural-sector activity, which is a devolved function.

The Bill was not passed before the August 2017 elections thereby expiring with the dissolution of Senate. The project was later closed with BAF in October 2017.

EAGC’s Position

EAGC sought to re-engage the new Senate to ensure the Bill is re-introduced as a Senate Bill and to advocate its enactment at the earliest possible opportunity to allow a functioning regulatory framework in place to govern the WRS.

Expected Outcome

 A suitable WRS Act will catalyse greater lending to agriculture through WRS financing; such financing will promote growth and competitiveness of the agricultural sector and increase incomes of MSMEs in agriculture, many of which are run by smallholder farmers.

Vision 2030 foresees an agricultural sector with “laws that foster agricultural competitiveness and regulate the sector for the benefit of both domestic and foreign investors.” The Vision also foresees “improved access and deepening of financial services and products for a much larger number of Kenyan households and small businesses.” The WRS legislation is expected to facilitate access to finance for smallholder farmers to increase their incomes.

Generally, the WRS legislation will create investor confidence in the sector and promote industry growth, thus improving employment opportunities and securing more jobs for the rural population, mainly women, and young people working in various levels along the value chain. This is in line with the strategic objectives of the PSDS, one of which is to “create a conducive business environment for Private Sector growth by alleviating major constraints, and to enhance the growth and competitiveness of the Private Sector, especially the Micro-Small and Medium Enterprises (MSMEs)”.

You can view various iterations of the Bill as follows;

Warehouse Receipt System Bill,  2017

Warehouse Receipt System Bill, 2018