(NAIROBI, KENYA) – Kenyan commercial banks increased agricultural lending by a record KES 53.1 billion ($410 million / GBP 309 million) in the year to June 2026, as stronger farm incomes and improved cash flows made the sector more attractive for credit.
Agricultural credit rose 35.1% to KES 204.2 billion ($1.58 billion / GBP 1.19 billion), making farming the fastest-growing major destination for private-sector loans, Central Bank of Kenya data shows.
The increase was more than three times the 10.6% growth in total private-sector credit, which expanded by KES 409.7 billion ($3.16 billion / GBP 2.38 billion) to KES 4.29 trillion ($33.1 billion / GBP 25 billion).
Credit flows in the 12 months to June 2026 far exceeded previous periods. Lending rose by KES 16.9 billion ($130 million / GBP 98 million) in the year to June 2025 and KES 12.3 billion ($95 million / GBP 71 million) a year earlier.
The growth signals a shift in how lenders view a sector long considered difficult to finance because farmers’ incomes are tied to rainfall, harvest cycles and unpredictable commodity prices.
Trade recorded the largest absolute increase at KES 157.2 billion ($1.21 billion / GBP 914 million), taking outstanding credit to KES 854 billion ($6.59 billion / GBP 4.97 billion), but its 22.6% growth was below agriculture’s 35.1% expansion.
Finance and insurance lending grew 34.2% to KES 190.7 billion ($1.47 billion / GBP 1.11 billion), while building and construction increased 29.1% to KES 206 billion ($1.59 billion / GBP 1.20 billion).
Banking industry players say improved cash flows have made it easier for farmers to borrow and service loans, giving lenders greater confidence to extend financing across the value chain.
KCB Group CEO Paul Russo said farming was gradually moving away from rainfall dependence toward production models generating more predictable income.
“The funding is seasonal and is harvest-linked, and so it is not long-term,” Mr Russo told investors in August. “There is a bit of agriculture moving out of rain-fed and is starting to demonstrate cash flow and sustainable model for you to repay. That is a significant change, particularly in Kenya.”
KCB reported a 67.8% climb in agricultural financing in the year to June, the fastest growth among its sectors.
Agriculture accounted for 6.2% of KCB’s KES 1.181 trillion ($9.11 billion / GBP 6.88 billion) loan book in June, showing that while farming remains smaller than trade, manufacturing and personal loans, its share is expanding.
KCB Bank Kenya CEO Annastacia Kimtai attributed the increase to four years of adequate rainfall, State-backed fertiliser subsidies and strong coffee earnings, which she said improved farmer cash flows.
“For the last four years the rains have been adequate in our country,” Ms Kimtai said.
Equity Group is targeting agriculture to account for 30% of its loan book by 2030, up from about 10%.
The lender is shifting from short-term working-capital facilities toward mechanisation, productivity, agro-processing, value addition and export-oriented businesses.
Equity chief strategy officer Brent Malahay said longer-term financing would help expand the agricultural portfolio as the lender supports entire value chains rather than mainly seasonal farm expenses.
The strategy covers livestock and leather, tea, coffee, cereals and aquaculture, linking production to processing and export markets.
“As we help connect and build the value chains into agro-processing value addition, you will see the tenure of the loans increase,” Mr Malahay said in March.
“We have an initiative to drive productivity at the farm level, to mechanise farms and also to drive value addition, and we have an initiative also all the way to support businesses in the agricultural space to export as well.”
The increased financing comes as agriculture remains one of Kenya’s biggest sources of employment and economic activity, creating a large potential market for lenders seeking new areas of credit growth.
But the rapid expansion also means greater exposure to risks that have traditionally made farming difficult to finance.
Weather shocks, commodity price changes and production disruptions can weaken farmers’ ability to repay loans, potentially turning rapid credit growth into higher defaults if farm incomes deteriorate.
The CBK has reported an increase in non-performing agricultural loans in the first half of 2026, highlighting the risks accompanying the expansion.