Study on the Agricultural Risk Management Strategies by the Agricultural Finance Corporation of Kenya

Abstract

The study set out to establish the risks facing Agricultural Finance Corporation, determine the risk management strategies deployed to counter these risks and assess the effectiveness of these strategies in meeting the overall corporate objectives. This study set out to establish the relationship between risk management and the performance of the Agricultural Finance Corporation. The study involved the analysis of credit performance indicators for the period 2010 to 2012. A trend analysis was established, on the basis of which a descriptive analysis was conducted to determine the impact of implementing risk management strategies on the performance of the Agricultural Finance Corporation. An overall analysis showed that the Corporation is significantly affected by external factors, including political interference and government policy but that internal factors are also contributing to the deteriorating performance of its loan book. The analysis shows that following the adoption of risk management in its lending operations, Agricultural Finance Corporation is realizing an improvement in the performance of its loan portfolio.