Agriculture sector borrowing balloons to Sh167.7 billion

The Central Bank of Kenya said that lending in the agriculture sector has ballooned to Sh167.7 billion in September 2025, up from Sh141.9 billion in September 2023.

CBK Governor Kamau Thugge said that the upward borrowing trend is encouraging but must go further to enable small-scale farmers to access funds.

In a speech read by his deputy, Gerald Nyaoma, Thugge spoke at the 8th World Congress on Rural and Agricultural Finance (AFRACA) in Mombasa, which brought delegates from 80 countries.

The Congress that convenes every three years is the first of its kind to be held in Kenya since its inaugural launch in 2005 in Addis Ababa.

The World Congress on Rural and Agricultural Finance called for adequate financing for small farmers.

AFRACA said that millions of small-scale farmers in Kenya and across Africa continue to struggle with financing.

AFRACA Secretary General Thomas Essel said that the base of local agri-food systems comprises millions of small and medium-sized businesses and smallholder farmers who produce one-third of the food consumed worldwide and who are the most disadvantaged when it comes to access to finance.

Thugge revealed that the Credit Guarantee Scheme (CGS), originally launched during the Covid-19 pandemic, has disbursed over Sh6.7 billion to MSMEs, including those in agriculture.

The Governor said that de-risking agricultural lending through CGS has transformed agricultural credit access in Kenya.

"To enhance its reach and sustainability, the scheme is being transitioned into a regulated entity under the CBK. This transformation will allow private sector participation and attract support from development partners," said Thugge.

He was optimistic that the expanded CGS will offer tailored risk guarantees to financial institutions, unlocking credit for high-impact agricultural ventures.

The Governor said that the introduction of the Kenya Green Finance Taxonomy (KGFT) and the Climate Risk Disclosure Framework in April 2025 has promoted climate-smart agriculture through green finance as part of Kenya’s green economy strategy.

He explained that the initiatives open new frontiers for green lending in agriculture, supporting initiatives in water management, soil health, crop diversification, drought-resistant varieties, and aquaculture.

"Let this Mombasa Congress of 2025 be remembered not just as a gathering of minds, but as a turning point where the world reaffirmed its commitment to ending hunger, unlocking agricultural finance, and building inclusive, climate-resilient food systems,” he said.

The Governor said the initiatives align financial flows with climate goals, ensuring that agriculture becomes both productive and sustainable.

He explained that scaling Finance Plus Programs integrates financial support with agricultural extension services, providing farmers with access to quality seeds, inputs, and best practices.

"These programmes have proven effective in boosting yields, improving livelihoods,

and fostering long-term resilience," said.

The Governor said the initiatives open new frontiers for green lending in agriculture, supporting initiatives in water management, soil health, crop diversification, drought-resistant varieties, and aquaculture.

"I urge banks and financial institutions to seize the opportunities in agriculture and green finance. 'Let us innovate, collaborate, and invest in the future of farming,' said Thuge.

Thugge noted that the agriculture sector grew by 4.6 per cent in 2024, supported by favourable weather and targeted government interventions such as subsidised fertiliser programmes.

He said agriculture accounts for over 65 per cent of exports while providing 75 per cent of employment and supports more than 80 per cent of the rural population, with key exports being tea, coffee, and cut flowers that are globally recognised.

“Agriculture is the backbone of many African economies. In Kenya, it contributes approximately 25 per cent directly to GDP and 27 per cent indirectly through linkages with agro-industries and services.

Thugge, however, said that 98 per cent of farming is dependent on rainfall, making the sector vulnerable to climate variability.

He regretted that global supply chain disruptions and geopolitical tensions have further strained agricultural markets.

Essel called for the financing of rural and agricultural MSMEs.

The SG said that the role of robust financing mechanisms and policy is a collective consensus to continue amplifying the call to achieve SDG’s targets, particularly SDG2 on ‘zero hunger’, of which food systems remain the main focal point.

He called for more awareness about the critical role that robust finance and policy can play in the achievement of the SDGs and the urgency of food system resilience, as well as identify emerging patterns and solutions across regions in response to the UNFSS+2 call to action by the UN Secretary-General.

"We seek to enhance the readiness and capabilities of financial institutions to mobilise and deploy customised financial products with minimal risks towards local agrifood systems," said Essel.

The SG urged nations to adopt Kenya’s ‘Bottom-Up Economic Transformation Agenda’ (BETA) that prioritises agriculture as a key sector for economic recovery and inclusive growth.

Essel said the focus should be on strengthening agricultural value chains, financing and mechanisation, improving production and productivity, and enhancing market access.

"It is significant to note that the government of Kenya’s ‘Bottom-Up Economic Transformation Agenda’ (BETA) prioritises agriculture as a key sector for economic recovery and inclusive growth," said Essel.

The Congress was co-hosted by the African Rural and Agricultural Credit Association (AFRACA) and the Central Bank of Kenya in collaboration with the Latin American Association of Development Financing Institutions (ALIDE), the Asia-Pacific Rural and Agricultural Credit Association (APRACA), the Near East–North Africa Regional Agricultural Credit Association (NENARACA), and the Confédération Internationale du Crédit Agricole (CICA).

The four-day conference resolved to formulate policies on robust financing.

mechanisms to effectively address agrifood system challenges.