The easing monetary policy in Kenya’s credit market is attracting farmers to banks for facilities to finance their operations, with Central Bank listing land expansion, purchasing of machinery, and leasing of farm equipment as among the top priorities.
- •At its latest Monetary Policy Committee’s (MPC) meeting, the CBK lowered its base lending rate for the sixth consecutive time, decreasing it by 25 basis points to 9.75%.
- •The progressive cuts aim to stimulate private sector credit growth and boost economic activity.
- •The CBK expects commercial banks to respond by reducing their lending rates, following a trend where average lending rates have already started declining, albeit marginally.
“The main sources of credit to farmers are banks, Savings and Credit Cooperatives (SACCOs), family and friends, buyers of farm produce and digital credit providers. The proportion of sampled farmers reporting to have accessed credit for farming remained below 40 percent,” CBK says in a survey on agricultural trends conducted in May.
The survey shows banks are leading sources of credit to farmers with 58% of respondents making use of the loans to buy machinery, lease farms and expand their land. This is compared to 41% of respondents in March who turned to banks for cash. The overall borrowing was however lower in May (34%) compared to March (36%).
“Results of the May 2025 survey indicates that, similar to findings of previous surveys, high interest rates remain the primary barrier to accessing credit for farmers. The proportion of farmers citing it increased to 54 percent from 38 percent in March 2025 but this was relatively low compared to 58 percent in November 2024,” CBK added.
The percentage citing lack of collateral as a constraint to accessing credit remained stable at below 30% but above 20% for the period November 2024 – May 2025. The percentage of sampled farmers not requiring credit decreased to 25% in May 2025 from 37 percent in March 2025, with some farmers reporting that they would not want to expose their farms to the risk of auction given that farming is highly susceptible to rain failure.
Subsidized Fertilizer
The survey results show the proportion of farmers reporting to have had no access was 35% in May 2025. Those who did not benefit gave various reasons ranging from not being interested at all to logistical challenges whereby they received alerts to collect but could not travel due to the long distances involved.
At least one out of every two sampled farmers reported having benefitted from the government subsidized fertilizer. The proportion peaked in the January 2025 survey in which 69% of the sampled farmers reported having received the fertiliser, possibly reflecting increased access in readiness of the March-May long rain season.
In the KSh 4.2 Trillion Financial Year 2025/26 budget, the government is proposing an allocation of Ksh 47.6 billion for various programs under agriculture sector.
These include: Ksh 8.0 billion for the Fertilizer Subsidy Programme; Ksh 10.2 billion for the National Agricultural Value Chain Development Project; Ksh 800.0 million for Small Scale Irrigation and Value Addition Project; Ksh 1.2 billion for Food Security and Crop Diversification Project and Ksh 5.8 billion for the Food Systems Resilience Project.
