Low funding and high taxation are emerging as key obstacles to the growth of Kenya’s agriculture sector, despite its central role in the country’s vision for economic transformation.

These concerns were brought to light during an Intergovernmental Authority on Development (IGAD) meeting focused on Africa’s food systems and the performance of member states.

Tim Njagi, a researcher and representative from the Africa Network of Agricultural Policy Research Institute, noted that while Kenya remains a top agricultural player in the region, it is still falling short of its potential due to inadequate resource allocation. He said that the sector, which contributes about 20 per cent to the national gross domestic product (GDP), continues to receive disproportionately low investment despite high level declarations for increased funding.

The international benchmark, set by the Maputo Declaration, recommends that countries allocate at least 10 per cent of their national budgets to agriculture. However, Njagi revealed that Kenya has not met this target consistently.

The last notable year was 2017, when combined contributions from the government, domestic, and foreign private sectors reached just 8 per cent. Currently, the average allocation stands at a modest 5 per cent. Even with agriculture’s clear contribution to the economy, Njagi pointed out that budgetary decisions have not matched the sector’s importance.

“If you combine what everybody spends; that is government, foreign private sector and our domestic private sector, we don’t even get to 10 per cent. The last time we did that was in 2017 and it’s been kind of flat at around 8 per cent,” he said during the meeting. “If you’re saying agriculture drives 20 per cent of GDP, but we’re only investing 5 per cent of our resources into it, the imbalance is evident.”

A lack of accountability further compounds the problem. Njagi expressed concern that national ministries and counties are only able to account for a fraction of the funds directed to agriculture, suggesting systemic issues in tracking and disbursing resources effectively. “When counties account for just one per cent and ministries two per cent, it’s clear that resources are not following functions,” he noted.

Kenya’s economic rebound

This mismatch between policy ambitions and fiscal commitment, he warned, continues to stall the sector’s potential to lead Kenya’s economic rebound.

With the current geopolitical factors which have a direct impact to the country will see the sector further underfunded even as the government puts subsidized fertilizers at the centre of attention.

This might not be sufficient to achieve the agricultural led economy ambition as irrigation projects are yet to come to completion. Currently the country relies mostly on rain fed agriculture and the last agricultural performance was greatly accelerated by the heavy rains recorded in the third quarter of 2024 according to a report by the Central Bank of Kenya (CBK).

With the geopolitical factors, the government faces limited access to external financing as most of the global lenders shift their attention to other areas of interests.

According to John Mbadi, the National Treasury and Economic Planning Cabinet Secretary, the government is bound to go heavy on domestic borrowing, a factor which was recorded in the week ending March 28 where the government accepted most of the amount offered during the bidding process surpassing the Sh70 billion targeted amount.

“We are no longer looking forward to much support from that direction and therefore we have to look inward and without again destabilising our domestic markets,” he said during an engagement with parliamentarians last month.

At the moment, the only viable way to boost the sector, according to Njagi, is to leverage on the private sector which has always had the potential to drive economic change. “So, we need to see how we can incentivise, especially the private sector, to put in more money. So that means that we need to look at how the government is spending money. Does the government spend money to make sure that it’s incentivising private sector investments?” he posed.

In line with this, the government’s aggressive revenue collection strategies have also continued to affect the performance of the sector as most investors prefer holding back crucial information from the government as this makes the government tax them more, yet their income is both climate and market driven.

“It’s been a big challenge to get data from the private sector, especially between this period because of the disincentives. So, when the private sector reports, they get punished and when they say they are doing good, they become a target for taxation. So, people then stop reporting,” Njagi revealed.

Additionally, he stated that data on expenditure from the county level has been difficult to obtain while trying to track the progress of the sector thereby further limiting stakeholders from efficiently acting on the shortfalls. “The way the data is captured, we are not able to attribute expenditures that are spent outside the agriculture sector departments. So ideally, if we have good data mechanisms, we should be able, for example, to track how much has been spent,” he said.

Data collection

He noted that some counties are making it possible for data collection through the use of technology.} “Almost 20 counties are doing the county application and investment apps and most of that is targeting agriculture. We should be able to be tracking that, but the way the data is right now, you are only able to do that at the national level, because at the national level that has been developed by FAO,” he explained.

To help address the issue, Agatha Thuo, the chief executive of Agriculture Sector Network, stated that there is need for both the National Treasury and Controller of Budget to build county government capacity to be able to follow the classification of public expenditures.

“With this we will be able to track and be able to see what other sectors are supporting or are investing in support of agriculture but for the national level, I think it’s very clear,” she said.
Further, to help bolster the performance of the sector, the country needs to go heavy on value addition as currently the country misses a lot through exporting primary products which are sometimes imported then supplied to different parts.

“Even when we are exporting, most of our exports are still going out as primary products, rather than value-added products and so there has to be a discussion around that because we already have markets that we are not fully exploring,” she advised.