Kenyan farmers are shifting toward Saccos and commercial banks to finance their farms, with reliance on loans from family and friends falling as overall borrowing increases, a Central Bank of Kenya (CBK) survey shows.
The proportion of sampled farmers reporting loans from Saccos rose to 32 percent in September from 17 percent in July, while bank borrowing increased to 29 percent from 21 percent.
Over the same period, the share borrowing from family and friends dropped to 29 percent from 38 percent, reversing a pattern in which personal networks had remained the leading reported source of farm credit.
The shift coincided with a rise in the proportion of farmers who borrowed to finance agricultural activities, from 34 percent in July to 45 percent in September, pointing to greater use of credit to keep farms running.
“Consistent with previous findings, trends in use of credit for various farming activities show that farmers typically borrow to purchase farm inputs, with the proportion reporting to have used farm credit this purpose at 91 percent in September 2026 compared to 81 percent in July 2026,” said the CBK.
“The proportion reporting using agricultural loans to meet labour costs stood at 60 percent in September 2026 compared to 49 percent in July 2026, pointing to the significant role of labour costs in the production process.”
The survey was conducted between September 21 and 25 among 466 respondents drawn from selected farms and food markets.
The growing use of formal lenders comes as farmers face elevated costs of buying seeds, fertiliser and pesticides, as well as paying workers and meeting other production expenses.
Other sources recorded mixed movements, with borrowing through informal savings and credit groups rising to 22 percent from 16 percent, while the proportion reporting digital loans fell to 13 percent from 16 percent.
The movement toward banks also comes amid a broader easing in commercial lending costs, with CBK data putting the average commercial bank lending rate at 14.4 percent in September 2026 at a time the Central Bank Rate stood at 8.75 percent.
Saccos offer another established channel for credit, with the sector’s regulated institutions holding Sh1.08 trillion in assets and extending Sh845.11 billion in gross loans by the end of 2024.
Banks and Saccos are lending into a sector where repayment depends partly on weather, harvest volumes, produce prices and the cost of getting crops to market.
The CBK’s September survey found that 76 percent of sampled farmers relied mainly on rain-fed agriculture, leaving production exposed to changes in rainfall.
The report also found that 97 percent of respondents identified weather conditions as a factor affecting retail prices, while 92 percent cited transport costs and 80 percent pointed to input prices.
