The Critical success factors influencing the adoption of the warehouse receipt system in Kenya: a case study of Nakuru County

Abstract

Agriculture is central to Kenya's economy, particularly for smallholder farmers, who often struggle to access credit due to stringent collateral requirements. Using title deeds as collateral puts their land at risk. The Warehouse Receipt System (WRS) presents a promising solution enabling farmers to secure loans against stored commodities. However, WRS adoption in Kenya has been limited and hindered by challenges such as a lack of awareness of the WRS, price volatility, high transaction costs, and logistical inefficiencies. This study explores WRS adoption among Kenyan smallholder farmers, focusing on barriers and critical factors for success. Employing a case study conducted in Nakuru County, it uses a mixed-methods approach, combining quantitative surveys with qualitative insights from Key Informant Interviews (KIIs). The findings reveal that low awareness, price speculation, and logistical hurdles discourage adoption, while farmers voice the need for stricter regulations, financial incentives, and improved infrastructure. Key success factors are grouped into four dimensions: stakeholder collaboration (involving government, private sector, and farmer capacity building), organisational structure (emphasising a robust WRS Council/Secretariat and efficient stakeholder management), industry dynamics (including policy harmonisation, market access, and political support), and technological advancements (notably blockchain and mobile banking). These solutions can help small farmers solve their problems and give them more confidence. By using digital tools, farmers can get easier access to loans. This shows how important it is for everyone involved to work together to improve the WRS in Kenya. The study offers policy recommendations to strengthen regulations, improve warehouse access, broaden financial inclusion, and leverage technology for greater efficiency, contributing to the discourse on agricultural finance, market linkages, and sustainability for smallholder farmers. Keywords: Warehouse Receipt System, Management, Collateral for Farmers, Critical Success Factors, post-harvest losses, Price Speculation