Banks pour record Sh53 billion into farming: Inside Kenya’s new agriculture credit boom

Kenya’s commercial banks are putting more money into agriculture than ever before.

Agricultural credit rose by Sh53.1 billion in the year to June 2026, taking outstanding loans to the sector to Sh204.2 billion, according to Central Bank of Kenya data.

That represents a 35.1% increase - more than three times the 10.6% growth recorded across total private-sector credit.

The jump is notable because farming has traditionally been a difficult sector for banks to finance.

Farmers face weather risks, fluctuating commodity prices, seasonal income and production costs that often arrive months before they are paid.

Something appears to be changing.

Banks are following the cash

Bank executives attribute part of the increase to stronger agricultural cash flows.

KCB Group reported a 67.8% increase in agricultural financing in the year to June, with agriculture accounting for 6.2% of its Sh1.181 trillion loan book.

The bank says some farming operations are becoming more predictable as producers move beyond purely rain-fed agriculture.

KCB is not alone.

Equity Group is targeting agriculture to account for 30% of its loan book by 2030, compared with about 10% currently.

Its strategy goes beyond seasonal farm loans to include mechanisation, productivity, agro-processing, value addition and export-oriented businesses.

That shift matters because agricultural finance is no longer just about giving a farmer money to buy fertiliser before planting.

Banks increasingly see an entire value chain - from production and machinery to processing, transport and export - as a lending opportunity.

Borrowing for basic costs

A July 2026 CBK agriculture survey found that 34% of sampled farmers had borrowed to finance farming, up from 30% in May.

But the survey also showed that farmers were using credit for immediate production needs, including fertiliser, certified seed, labour, fuel and irrigation.

Commercial banks were the reported source for 21% of borrowing farmers.

Friends and family remained the biggest source at 38%, followed by buyers of farm produce at 19%. SACCOs accounted for 17%, while digital lenders accounted for 16%.

More agricultural borrowing does not automatically mean farmers are expanding profitable businesses.

Some loans are simply helping producers meet rising costs and keep existing operations running.

The risk behind the lending surge

Agriculture may be attracting banks because cash flows have improved, but the risks that made lenders cautious have not disappeared.

Weather remains a major variable.

So do commodity prices, input costs and market disruptions.

CBK has already reported an increase in non-performing agricultural loans during the first half of 2026, a reminder that rapid credit growth can eventually create repayment problems if farm incomes weaken.

The timing is significant as Kenya heads into a period of expected heavy rainfall and heightened climate risk.

For farmers, however, greater bank interest could eventually mean more options beyond short-term emergency borrowing - particularly where financing is tied to irrigation, machinery, storage, processing and reliable markets.

The numbers show that agriculture is becoming a much larger part of Kenya’s formal credit market.