Kenya’s agricultural sector is showing fresh signs of strain as access to farm credit tightens and production costs remain high, even as the broader economy grapples with global policy shifts and weak consumer demand.
- •According to the Central Bank of Kenya’s (CBK) September 2025 Agriculture Sector Survey, the share of farmers borrowing to finance their activities fell to 31%, down from 41% in July, reflecting slower credit uptake despite lower lending rates.
- •SACCOs have emerged as the leading source of farm financing, with their share of borrowers rising sharply to 44% from 19% in July.
- •Borrowing from commercial banks also grew slightly, while uptake from the Hustler Fund remaine low at 9%.
“The sustained monetary policy easing has resulted in relatively lower lending rates, and this may explain why a relatively larger share of farmers reported to have borrowed from banks and SACCOs,” the CBK said in the report.
The CBK attributes the growing reliance on SACCOs and banks to digital onboarding and wider outreach, though informal lenders, family, and digital platforms still play a limited role in rural finance.
Most farmers used their loans to buy fertiliser, seeds, and pesticides, underscoring agriculture’s dependence on affordable input financing at a time when global supply disruptions continue to affect prices.
CEOs Warn of Slower Growth
Findings from the CBK CEO Survey, conducted over the same period, mirror the challenges seen in agriculture. Over 1,000 chief executives said they remain cautiously optimistic about Kenya’s economic prospects but warned of persistent headwinds linked to high energy costs, liquidity challenges, and subdued consumer demand.
The CEOs said profit margins remain under strain, with some firms considering job cuts and cost rationalisation measures to stay afloat. The hospitality and tourism sectors are among the hardest hit, reporting fewer bookings and a slowdown in donor funding.
While credit conditions have marginally improved, business leaders are urging the government to lower production costs, clear pending bills, expand access to affordable financing, and strengthen trade diplomacy to safeguard jobs and investment.
The CBK report also flags rising import costs and uncertain external conditions as key risks to the outlook. Executives noted that shifting U.S. trade policies and the expiry of the African Growth and Opportunity Act (AGOA) could weigh on exports and increase the cost of raw materials and finished goods.
“Most respondents anticipate being affected through increased costs for inputs and finished goods and diminished export opportunities,” the report notes.
Despite the challenges, many firms are turning to digital transformation and automation to boost efficiency and remain competitive in a tightening business environment.
