From Left: Kennedy Oketch, Agriculture Economy and Financial Advisor, GIZ Kenya, David Adama, Senior Policy Officer, AGRA, Rashid Khator, Secretary of Administration in the State Department of Agriculture and Peter Owoko, Director of Policy at the State Department of Agriculture during the FINAS2026 media launch in Nairobi.Kenya and other African countries are being urged to rethink how they finance agriculture and food systems. This comes amid shrinking donor support, rising global economic uncertainty, and growing climate-related risks.
Speaking ahead of the Financing Agri-Food Systems Sustainably (FINAS) 2026, Financial Sector Deepening Kenya (FSD Kenya) Agriculture Finance Lead Jared Ochieng said African countries must build stronger and more sustainable financing systems.
These systems should support farmers, small businesses and food production without heavy reliance on external aid.
Agriculture remains one of Kenya’s key economic sectors. It contributes about 22.4 percent directly to the country’s Gross Domestic Product (GDP).
It also contributes another 27 percent indirectly through links with manufacturing, distribution and other sectors, according to the Kenya National Bureau of Statistics (KNBS).
The sector employs more than 40 percent of the total population and over 70 percent of rural communities.
However, access to affordable financing remains one of the biggest challenges facing farmers and agribusinesses.
Ochieng said the current global economic situation has exposed the vulnerability of African economies that depend largely on donor funding and foreign capital.
“We have seen global funding and market volatility worsen due to policy changes, reduction in overseas development assistance and disruptions in trade flows,” said Ochieng.
He pointed to recent decisions by some European countries and development agencies to reduce aid spending.
This is as governments redirect resources to defence and domestic priorities.
According to the Organisation for Economic Co-operation and Development (OECD), global aid flows are expected to tighten further.
This is due to economic pressures forcing donor countries to cut expenditure.
Ochieng noted that these changes have led to higher cost of capital, tighter liquidity, and reduced financing opportunities for developing economies like Kenya.
“What this means for Kenya and Africa is that we must start designing systems that cushion us from these shocks and create a financial architecture that works for us,” he said.
He explained that agriculture financing should not only focus on increasing access to loans. It should also improve financial health among farmers, women and small enterprises.
“We care about how these groups manage day-to-day needs, manage risks and invest in their futures,” he added.
The Central Bank of Kenya (CBK) has previously noted that lending to agriculture remains low despite the sector’s importance to the economy.
CBK data shows agriculture receives less than five percent of total commercial bank lending in Kenya. Many financial institutions consider the sector risky due to climate shocks and price fluctuations.
To address the financing gap, Ochieng said blended finance and de-risking solutions are becoming increasingly important.
“Blended finance involves the use of public or donor funds to attract private investment into sectors considered risky but economically important. It is about deploying public resources to catalyse private investment,” he explained.
Experts say financing remains critical in transforming Kenya’s food systems, especially as climate change continues to affect productivity.
The 2025 Planetary Health Check Report cited by Ochieng indicates that seven out of nine planetary boundaries have already been breached globally.
This signals worsening environmental degradation.
This, he said, calls for increased investment in green and climate-smart agriculture.
“We have to rethink food systems and allow green finance to play a huge role,” he said.
Kenya has increasingly promoted green financing mechanisms such as green bonds and sustainability-linked loans to support environmentally friendly investments.
In 2019, Kenya became the first East African country to issue a green bond through Acorn Holdings.
The bond raised Sh4.3 billion for environmentally sustainable student housing projects.
Ochieng said future agricultural financing models must place farmers and livelihoods at the centre. They must also align investments with climate and biodiversity goals.
“It cannot be a top-down process. Finance must reflect lived realities and socio-economic conditions of the people we work with,” he said.
Agriculture experts are now calling for stronger policies, local capital mobilisation, and innovative financing tools.
These are needed to ensure smallholder farmers can access affordable credit and adapt to changing climate and market conditions.
