Digital lenders are emerging as a major source of financing for Kenyan farmers, signalling a shifting borrowing patterns between different sources of credit, a new survey by the Central Bank of Kenya (CBK) shows.
The Agriculture Sector Survey 2026 indicates that 16 percent of sampled farmers reported accessing digital loans in July, down from 30 percent in May.
CBK said farmers’ choice of lenders varies depending on factors including the cost of credit, ease of access, awareness and availability of information about financing options.
“It is important to underscore that farmers’ preferences on where to access credit may change from period to period depending on several considerations such as the effective cost of credit, ease of credit access, farmer awareness and information about the credit facilities, among other considerations,” the report said.
Overall, access to agricultural credit increased in July, with 34 percent of sampled farmers reporting that they had borrowed to finance farming activities, compared with 30 percent in May.
Family and friends remained the most commonly reported source of credit, although their share declined to 38 percent in July from 45 percent in May.
Borrowing from commercial banks also fell, with 21 percent of farmers reporting access to bank credit in July compared with 32 percent in May.
Credit obtained from buyers of farm produce declined sharply to 19 percent in July from 45 percent in May.
The findings highlight the diverse financing channels available to farmers, with digital lenders providing an alternative to traditional financial institutions that often require collateral and other formal lending requirements.
Farm inputs drive borrowing
The survey found that farmers mainly borrow to finance the purchase of agricultural inputs. About 81 percent of farmers who accessed agricultural credit in July said they used the loans to purchase farm inputs, compared with 86 percent in May.
Labour costs were another major use of agricultural credit, with 49 percent of farmers reporting borrowing for this purpose in July, down from 77 percent in May.
The findings underscore the significant role of financing in meeting production costs, particularly at a time when farmers continue to face high input and operating expenses.
CBK recommended continued government interventions to reduce the cost burden on farmers, including subsidised fertiliser and the provision of certified seeds.
The report also called for measures to lower the cost of farm equipment and machinery to encourage mechanisation and improve agricultural productivity.
It further recommended sustaining efforts to reduce fuel costs, given the critical role diesel plays in agricultural production and the transportation of farm produce.
Agriculture sector records growth
The survey findings come against a backdrop of improved performance in parts of Kenya’s agriculture sector during the first quarter of 2026.
According to the Economic Survey 2026 published by the Kenya National Bureau of Statistics (KNBS), growth during the quarter was supported by increased tea production, sugarcane deliveries and milk deliveries to processors.
Tea production rose by 3.1 percent to 141.1 thousand metric tonnes in the first quarter of 2026, from 136.9 thousand tonnes during the corresponding period in 2025.
Sugarcane deliveries increased by 6.2 percent to 2,505.4 thousand metric tonnes, while milk deliveries to processors rose to 249.7 million litres from 244.4 million litres a year earlier. The increase in milk production contributed to stability in milk prices during the period, according to KNBS.
The Agriculture Sector Survey drew responses from 389 wholesale traders, retailers and farmers in selected towns across the country, providing an indication of changing credit access and financing patterns within the agricultural value chain.
