AfDB mulls Ksh64 Billion to fund small-scale farmers
By Nicholas Waitathu, March 18, 2025Kenya small-scale farmers will be among other growers to tap a $ 500 million (Sh64.5billion) facility established by the African Development Bank Group (AfDB) to support efforts to reduce food harvest losses.
The bank Vice President in charge of Agriculture, Human and Social Development, Beth Dunford, yesterday confirmed that consultations are going on with the institution’s board of directors to work with partners to establish a finance pool that will also support technical assistance and blended finance.
“The facility will also leverage up to $10 billion (Sh1.3trillion) in trade credit guarantees, risk sharing facilities and banks’ balance sheets. But we need co-investors, governments, donors, and the private sector to step up. We’re ready to make more happen,” said Dr. Dunford yesterday during the opening of a two-day African Development Bank High-level Conference on Scaling Finance for Smallholder Farmers in Africa at a Nairobi hotel.
SMEs holding economy together
Small-scale farmers in the continent are struggling with low financial access despite all the recommendations and efforts fast-tracked by stakeholders. Dunford noted that smallholder farmers and SMEs are the backbone of Africa’s agricultural sector, contributing 80 per cent of the continent’s food production and supporting the livelihoods of millions of rural households.
Despite their critical role, smallholder farmers face persistent challenges that undermine productivity and sustainability. These include limited access to affordable farm inputs, inadequate financing mechanisms, weak advisory services, asymmetries in market information, volatile market access, and vulnerability to external shocks, which include climate change impacts.
“Only six per cent of African continent smallholder growers access adequate credit to finance their farming. Africa’s smallholder farmers face a staggering $75 billion financing gap per year. Meaning that’s the amount of investment needed for equipment, tools, inputs and services…the basics they need to be productive and resilient. And less than 20 per cent of Africa’s smallholder farmers use improved seeds,” she added.
Equity Bank Group Chief Executive Officer and Managing Director James Mwangi blamed low agriculture productivity in the continent for subjecting small-scale farmers to unfair competition with large-scale growers. The imbalance situation in the entire agriculture value chain has denied smallholder farmers crucial benefits such as expanded markets and premium prices.
” For long-time small-scale farmers have been subjected to stiff competition with large plantation owners who enjoy strong financial will and more access to finance without many difficulties,” said Dr. Mwangi during the AfDB conference.
The banker complained that the smallholder farmers are made to compete for the high cost of fertiliser, seeds, and other inputs thus denying them an opportunity to exploit their endowed potential. “Why is agricultural productivity low? This is a result of failure by the markets to work and Governments in Africa are not aggressive to fix the challenges,” he added.
He advised Governments to address weak agricultural advisory and extension services which if revived will help encourage farmers to adopt modern farming practices. The government needs to address policies in the sector to cushion farmers against being treated as social sector groups but as real business players. Mwangi recommended that Governments need to provide public infrastructure such as farmers’ cooperative societies, and farmers’ associations to empower farmers to confront challenges along the value chain. This is over and above making the markets work providing a level playing ground.
African financial institutions he noted currently led only three per cent to small-scale farmers, a situation that has denied the growers an opportunity to grow the sector. “Currently, farmers are only accessing three per cent of finance from commercial banks. For the sector to fully benefit, commercial banks and the government need to increase access to finance to farmers to 30 per cent,” he added.
Agriculture and Livestock Development cabinet secretary Mutahi Kagwe emphasized the need for practical and inclusive financial solutions to support the backbone of Africa’s agricultural sector.
“Agriculture remains the backbone of our continent, providing livelihoods for over 60% of Africa’s population and significantly contributing to GDP. Yet, small-scale farmers—who feed our nations—struggle to access essential financial resources,” he stated.
He added. “Agriculture is more than a food source—it is a driver of economic growth, job creation, and food security,” Kagwe remarked, calling for a recalibration of agricultural financing.