How Managers of Kenyan-based Agribusiness Firms Perceive Matching Funds for Innovation Financing

Abstract Agribusiness innovation is vital for economic growth and diversification, and funds to support it are a major point of debate among innovation scholars and policy makers. Most investors or donors require agribusiness firms to provide matching funds contribution either in kind or cash to the innovation projects they finance. An explorative study of 12 Kenyan based agribusiness firms providing matching funds contributions revealed that managers of the firms perceive matching funds for financing their innovation to be a good thing because it shows their commitment to the project, promotes ownership, and contributes to longer term utilization of project results. This notwithstanding, the study further showed that majority of the agribusiness firms did not have policies to inform their decisions on matching funds contribution. Managers considered future business opportunity the project would create, and if the project was well aligned with the firm’s core business. The study established that matching funds contributions can be improved if firms properly quantify in-kind matching funds, and by strengthening enforcement of matching funds requirement. The paper provides preliminary empirical evidence of feasibility of implementing a matching funds scheme for agribusiness innovation financing in Kenya. Key words: agribusiness, financing, firms, innovation, matching funds, Kenya.