- Livestock farming has emerged as the largest beneficiary of AFC’s agricultural lending since 2022.
- Saccos and microfinance institutions are helping extend agricultural credit to farmers through a dedicated financing facility.
- Agro-processing remains a smaller part of AFC’s lending despite its potential to boost value addition in agriculture.
The Agricultural Finance Corporation (AFC) has advanced Ksh19.91 billion to more than 218,000 beneficiaries since January 2022, with livestock farming accounting for the largest share of loans issued by the state-owned lender.
According to the AFC Deployment Report, livestock farmers received Ksh8.95 billion, representing 47.5 percent of the corporation’s total direct lending during the period.
The figures, presented at the Agriculture and Food Systems Transformation Summit, highlight the sector’s significant demand for agricultural financing as Kenya seeks to strengthen food security and improve farmers’ earnings.
Seasonal crop production was the second largest beneficiary, receiving Ksh3.10 billion, equivalent to 16.5 percent of AFC’s retail loan portfolio. Together, livestock and seasonal crop farming accounted for nearly two thirds of the corporation’s retail lending.
Agribusiness ventures received Ksh1.63 billion, while permanent crop farming attracted Ksh1.42 billion. Horticulture farmers accessed Ksh885.9 million to support activities in a sector that contributes to domestic food supply and export earnings.
The report also shows that Ksh733.4 million was allocated to land purchases, while agro processing enterprises received Ksh275.4 million to support value addition and improve the competitiveness of agricultural products.
The financing is aimed at enabling farmers and agricultural enterprises to expand operations, invest in production and strengthen their businesses.
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To finance its lending activities, AFC mobilised Ksh3.85 billion from the National Treasury, development partners and multilateral initiatives. The funds comprised Ksh2.19 billion for loan facilities and Ksh1.67 billion in grants.
The corporation charges retail borrowers an annual interest rate of 10 percent on a reducing balance, under which interest is calculated on the outstanding loan amount.
Through the Rural Kenya Financial Inclusion Facility (RK-FINFA), AFC also channels credit at an annual interest rate of eight percent, providing an alternative financing option through existing financial institutions.
The report indicates that Ksh1.07 billion was channelled through the facility to savings and credit cooperative societies (Saccos) and microfinance institutions, enabling them to lend to farmers and other borrowers within their networks.
Under the arrangement, Saccos received Ksh493.7 million, while microfinance institutions accessed Ksh339.4 million.
The partnership model allows AFC to reach borrowers through established financial institutions, including those who may have limited access to conventional agricultural credit.
However, agro processing remains a relatively small component of the corporation’s lending, accounting for Ksh275.4 million, or 1.46 percent of retail loans.
The report points to the subsector as an area for further consideration, given its potential to help farmers increase the value of their produce before it reaches the market.
The lending figures reflect AFC’s role in financing different segments of agriculture, with livestock farming emerging as the leading beneficiary, followed by seasonal crop production.
The corporation’s financing forms part of wider efforts to support agricultural enterprises, improve productivity and build a more commercially oriented and resilient food system.
By Lizzy Aluga
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