- Digital lenders are becoming a bigger part of how Kenyan farmers meet urgent farm costs.
- Farmers continue to borrow heavily for inputs and labour as production expenses remain high.
- The shifting credit patterns highlight the growing need for affordable and sustainable agricultural financing.
Digital lenders are increasingly becoming an important source of financing for Kenyan farmers, signalling a significant shift in how agricultural producers access credit to meet the rising costs of farming.
New findings from the Central Bank of Kenya (CBK) Agriculture Sector Survey 2026 show that farmers are increasingly turning to alternative sources of credit, including digital lending platforms, as they navigate the cost of farm inputs, labour, equipment and other production expenses.
The survey found that 16 per cent of sampled farmers reported accessing digital loans in July, compared with 30 per cent in May. Although the proportion declined over the two months, digital credit remains a significant financing channel alongside traditional sources such as family and friends, commercial banks and buyers of agricultural produce.
Overall, agricultural borrowing increased in July, with 34 per cent of sampled farmers reporting that they had borrowed to finance farming activities, up from 30 per cent in May.
The changing pattern of borrowing demonstrates that farmers do not rely on a single source of financing. Instead, their choices are influenced by factors such as the cost of credit, accessibility, awareness and the availability of information about different lending options.
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CBK noted that farmers’ preferences can change from one period to another depending on the effective cost of borrowing, ease of accessing credit and their awareness of available financing facilities.
Family and friends remained the leading source of agricultural credit, although their contribution declined significantly. The proportion of farmers relying on this source fell from 45 per cent in May to 38 per cent in July.
Commercial banks also recorded a decline, with the proportion of farmers reporting access to bank credit dropping from 32 per cent to 21 per cent during the same period. Credit provided by buyers of agricultural produce experienced an even sharper decline, falling from 45 per cent in May to 19 per cent in July.
The changing figures point to a highly dynamic agricultural credit market in which farmers move between formal and informal financing channels depending on their immediate needs and the terms available to them.
Digital lenders have provided farmers with another option, particularly where traditional financial institutions may require collateral, extensive documentation or other formal lending conditions.
The growing importance of digital credit comes as farmers continue to face substantial production costs. According to the CBK survey, agricultural inputs remained the leading reason farmers borrowed money.
About 81 per cent of farmers who accessed agricultural credit in July said they used the funds to purchase farm inputs, compared with 86 per cent in May.
Labour was another major reason for borrowing. Approximately 49 per cent of farmers reported using agricultural credit to meet labour costs in July, down from 77 per cent in May.
The figures demonstrate how heavily farmers depend on credit to keep production activities running, particularly when they lack sufficient cash flow to purchase inputs or pay workers at critical stages of the farming cycle.
The CBK has recommended continued government intervention to reduce the financial burden facing farmers. Among the measures highlighted are subsidised fertiliser and increased access to certified seeds, which can help lower production costs while improving farm productivity.
The central bank also recommended measures to reduce the cost of agricultural equipment and machinery, arguing that affordable machinery could encourage mechanisation and improve productivity.
Fuel costs remain another concern because diesel is widely used in agricultural operations and in transporting farm produce from farms to markets. Reducing fuel-related expenses could therefore help farmers and other players across the agricultural value chain contain operating costs.
The latest credit findings come as parts of Kenya’s agricultural sector continue to record improved performance. According to the Economic Survey 2026 by the Kenya National Bureau of Statistics (KNBS), agricultural growth during the first quarter of the year was supported by increased production in key sub-sectors.
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Tea production rose by 3.1 per cent to 141.1 thousand metric tonnes in the first quarter of 2026, up from 136.9 thousand tonnes during the corresponding period in 2025.
Sugarcane deliveries increased by 6.2 per cent to 2,505.4 thousand metric tonnes, while milk deliveries to processors climbed to 249.7 million litres, compared with 244.4 million litres a year earlier. The increase in milk production also contributed to stability in milk prices during the period, according to KNBS.
The Agriculture Sector Survey collected responses from 389 wholesale traders, retailers and farmers in selected towns across Kenya, offering an indication of changing financing patterns within the agricultural value chain.
The findings suggest that while traditional sources of agricultural credit remain important, Kenyan farmers are increasingly operating in a diversified credit environment.
Digital lending is therefore becoming part of the wider financing mix, giving farmers another avenue to access money when they need to purchase inputs, hire labour or meet other farm-related expenses.
However, the continued shift between lenders also highlights the importance of making agricultural credit affordable, transparent and accessible. For farmers, the challenge is not simply finding credit, but finding financing that can be repaid sustainably without eroding the income generated from their agricultural activities.
As production costs continue to influence farming decisions, the availability and affordability of credit will remain a critical factor in determining the ability of Kenyan farmers to expand production, adopt modern machinery and improve productivity.
By Hillary Muhalya
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