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Originally published by The Standard BusinessMay 30, 2026
1h ago
Why CBK rules punish Kenya's safest borrowers and lock millions of farmers out of credit
Smallholder farmers in Kenya are being locked out of formal credit, not because they are risky borrowers, but because banking regulations are structurally biased against agriculture..
✨ Key Highlights
Kenyan banking regulations are unfairly penalizing smallholder farmers and agribusinesses, locking them out of essential credit despite having low default rates. This structural bias is hindering the agricultural sector's growth ahead of a major continental summit on food systems financing.
- Banks allocate only 3.2 to 3.6 percent of lending to agriculture, despite farmers having lower default rates than other borrowers.
- According to Jared Ochieng, Agriculture and Processing Finance Lead at FSD Kenya, prudential guidelines assign a 100 percent risk weight to loans to smallholders, similar to large corporate loans.
- This creates a disincentive for banks, as they must provision the full loan amount against their capital, making it costly to lend to numerous small borrowers.
- The upcoming FINAS 2026 summit in Nairobi will address these barriers to agricultural finance.
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