Kenyan farmers are increasingly ditching banks and SACCOs in favour of borrowing from family, friends and digital lending platforms, even as conventional borrowing costs fall.
The latest Agriculture Sector Survey by the Central Bank of Kenya (CBK) shows a clear pivot toward informal and tech‑enabled credit, underscoring changing preferences and risk dynamics in agricultural financing.
CBK’s Monetary Policy Committee lowered the Central Bank Rate (CBR) early this month to 9.0 per cent from a recent high of 13 per cent, its ninth consecutive reduction, to spur lending across agriculture, manufacturing and trade. Yet the survey indicates farmers are not responding uniformly to cheaper bank credit, opting instead for financing channels perceived as faster, more flexible or less intimidating.
During the review period, 37% of farmers reported borrowing to finance farming, up from 31% in September. Within this group, borrowing from friends and family surged to 25% from 6%, while access to digital loans rose to 23% from 13%.
By contrast, bank loan access fell to 30% in November from 53% in September, and borrowing from SACCOs declined to 30% from 44%, signaling a marked retreat from traditional lenders.
Most farmers who borrowed did so to purchase inputs, though this share dropped to 73 per cent from 94 per cent, while borrowing for labour costs eased to 47 per cent from 53 per cent. The numbers point to tightening use of credit for core farm operations, even as overall borrowing inches up.
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Experts say the pattern reflects persistent risk aversion and the dominance of subsistence farming. “A lot of our farmers are not commercial; they are subsistence growers, and that makes them shy away from loans, hence constrained innovation,” said Philis Njane, Agricultural Research and Innovation Secretary at the Ministry of Agriculture. “Commercial farmers are getting loans left, right, and centre. But for the rest, it’s a mindset issue; they fear the risk.”
Njane added that banks remain cautious on agriculture despite lower rates. “Even with rates dropping, agriculture gets a small share of bank portfolios,” she noted.
The shift toward family and digital lenders suggests farmers are prioritizing immediacy, familiarity and flexible terms over formal credit, a trend with implications for scaling productivity and formal financial inclusion in the sector.
By Masaki Enock
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