Commercial banks increased lending to the agriculture sector by a record Sh53.1 billion in the year to June 2026, as stronger farm incomes and improved cash flows made the traditionally risky sector more attractive for credit.
Agricultural credit rose 35.1 percent to Sh204.2 billion, making the sector the fastest-growing major destination for private-sector loans during the period, the Central Bank of Kenya data shows.
The jump was more than three times the 10.6 percent growth in total private-sector credit, which expanded by Sh409.7 billion to Sh4.29 trillion in the review period.
The credit flows in the 12 months to June 2026 were stronger compared to the previous period. Lending rose by Sh16.9 billion in the year to June 2025 and Sh12.3 billion a year earlier.
The growth in loans to agriculture 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 Sh157.2 billion, taking outstanding credit to Sh854 billion, but its 22.6 percent growth was well below agriculture’s 35.1 percent expansion.
Finance and insurance lending grew 34.2 percent to Sh190.7 billion, while building and construction increased 29.1 percent to Sh206 billion, leaving agriculture with the strongest growth among major sectors.
Banking industry players say improved cash flows have made it easier for farmers and agricultural businesses to borrow and service loans, giving lenders greater confidence to extend financing across the wider value chain.
KCB Group CEO Paul Russo said farming was also gradually moving away from dependence on rainfall toward production models that can generate 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 percent climb in agricultural financing in the year to June, the fastest growth among the sectors covered by the lender.
Agriculture accounted for 6.2 percent of KCB’s Sh1.181 trillion loan book in June, showing that while farming remains smaller than areas such as 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 earnings from coffee, which she said had improved cash flows for farmers.
‘For the last four years the rains have been adequate in our countr,’ Ms Kimtai said.
Equity Group is pursuing a more ambitious expansion, targeting agriculture to account for 30 percent of its loan book by 2030, up from about 10 percent.
The lender is shifting its focus from mainly 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 businesses across entire value chains rather than concentrating mainly on 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 the country’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 the risks that have traditionally made farming difficult to finance.
Weather shocks, changes in commodity prices and disruptions to agricultural production can weaken farmers’ ability to repay loans, potentially turning a period of rapid credit growth into higher defaults if farm incomes deteriorate.
The CBK, the financial services sector regulator, has reported an increase in non-performing agricultural loans in the first half of 2026, highlighting the risks accompanying the expansion.