Savings and Credit Co-operative Societies (SACCOs) are playing an increasingly significant role in financing agricultural activities, with their contribution to credit to farmers growing from 15 per cent in March 2026 to 23 per cent in May 2026.
A survey by the Central Bank of Kenya (CBK) further shows that nearly one-third (32 per cent) of the farmers interviewed obtained loans from commercial banks, up from 25 per cent recorded in March.
The survey also revealed that more than a quarter of the farmers surveyed relied on digital credit providers in May, March and January 2026, suggesting that digital lending platforms are becoming an increasingly important source of credit for farmers.
The survey disclosed that buyers of agricultural produce have become the leading source of credit for farmers, with 45 per cent of respondents obtaining financing from produce buyers.
“Borrowing from buyers of farm produce was reported by 45 per cent of the sampled farmers in May 2026 compared to 24 per cent in March 2026,” said CBK in its report.
The trend suggests that farmers are increasingly turning to customer-based financing to meet their funding needs as they explore alternative sources of capital.
The survey also revealed a growing dependence on informal credit channels, with 45 per cent of respondents reporting that they borrowed money from family and friends in May, compared to 37 per cent in March.
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Farmers also continued to move away from the government-backed Hustler Fund, with the proportion of borrowers declining from eight per cent to five per cent in May, according to the agricultural survey by CBK.
Despite the changing sources of financing, farm inputs remain the primary use of agricultural credit, with the report stating 86 per cent of farmers used loans to purchase inputs such as seeds, fertiliser and pesticides in May, a slight drop from 88 per cent in March.
“Consistent with previous findings, trends in the use of credit for various farming activities show that farmers typically borrow to purchase farm inputs,” CBK reported.
Labour costs also continued to account for a significant share of borrowing, with the proportion of farmers using agricultural loans to meet labour expenses rising to 77 per cent in May from 72 per cent in March.
The survey drew from 474 wholesale traders, retailers, and farmers in select towns across the country.
By Frank Mugwe
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