State to tweak agricultural debt structures
By Nicholas Waitathu, July 25, 2025Farmers are set to benefit from greater access to financing as the government moves to formalise agricultural financing through a national policy and supporting regulations.
This initiative, spearheaded by the Ministry of Agriculture alongside the National Treasury and Ministry of Planning, is expected to enhance food and nutrition security, reduce poverty, and expand employment opportunities within the country’s dominant sector.
For the first time in Kenya, agricultural financing will be guided by a unified policy framework. Agriculture Secretary Collins Marangu said that despite the sector’s critical role in the economy, its financing and subsidy structures have long been marred by fragmentation and the absence of clear, coordinated direction.
“This has led to disjointed approaches that limit access to finance across value chains,” he said. “Subsidy programmes, too, suffer from duplication and lack of synergy at both national and county levels.”
The government’s efforts come against a backdrop of low investment in the sector. Though agriculture contributes significantly to Kenya’s GDP, formal financial institutions have shown limited engagement.
According to the 2019 Financial Access Household Survey, only 3.2 per cent of Kenyans use formal loans for agricultural activities. Meanwhile, 51.4 per cent of smallholder farmers rely on borrowed funds—yet commercial banks allocate less than five per cent of their lending to agriculture, pushing nearly half of farmers into informal or unregulated credit options.
The draft regulations, currently undergoing public participation, propose a more structured system. Measures include the creation of a revolving fund for agricultural lending and the formation of a central body to coordinate financing actors.
The move aligns with international commitments such as the Maputo and Malabo Declarations– to allocate at least 10 per cent of their budgets to agriculture—targets Kenya has consistently fallen short of, allocating only around 3 per cent in recent years. Peter Odhiambo Owoko, a senior official in the State Department for Agriculture, said the policy is designed to establish a cohesive and sustainable financing framework. “It provides a roadmap for aligning government, private sector, and donor efforts, ensuring targeted support to crops, livestock, and fisheries across the value chain,” he said.