Farmers across the country are increasingly seeking financial support directly from their customers, friends, and family members to fund their agricultural activities, bypassing commercial banks, Saccos, and government-backed financial schemes like the Hustler Fund.
According to a latest survey by the Central Bank of Kenya (CBK) for November, many farmers are turning to informal credit sources, pointing to a dramatic shift in borrowing patterns.
The survey revealed that 18 percent of farmers in November opted for loans from buyers of their produce, such as milk and coffee.
This marks a sharp rise from zero percent in September, indicating a growing reliance on customer-based credit.
“Borrowing from friends and family was relatively higher as reported by 25 percent of sampled farmers in November 2025 compared to six percent in September 2025, while the proportion of those who reported having accessed digital loans stood at 23 percent compared to 13 percent in September 2025,” said CBK.
“The proportion that accessed bank loans was relatively lower at 30 percent in November 2025 compared with 53 percent reported in September 2025.”
Farmers have been shifting to different credit facilities over the last year, with a majority favouring big banks and digital loans around March, but the trend changed in September, when Saccos were the popular alternative.
In November, the number of respondents who sought credit from microfinance institutions shrank from 22 percent in September to nine percent.
“Similarly, 30 percent of the sampled farmers reported to have borrowed from Savings and Credit Cooperatives (Saccos) in the November 2025 survey compared to 44 percent in the September 2025 survey,” said CBK.
The move away from traditional financing channels is driven by frustrations with banks and Saccos.
Many farmers report that formal institutions have become increasingly difficult to access, with long application processes, high collateral requirements, and interest rates that are often deemed unaffordable.
Additionally, bureaucratic hurdles and lack of understanding of the agricultural sector by financial institutions are exacerbating the issue, leaving farmers with limited options for formal credit.
"The proportion of farmers who reported to have borrowed to finance farming was less than one-half at 37 percent in November 2025 compared to 31 percent in September 2025," said the CBK.
The survey drew 306 respondents from wholesale traders, retailers, and farmers in select towns across the country. The data reveals notable shifts in the way Kenyan farmers are using credit for agricultural activities.
Farmers continue to borrow primarily for the purchase of farm inputs, but the proportion of those seeking credit for this purpose has dropped significantly from 94 percent in September 2025 to 73 percent in November.
Additionally, the percentage of farmers using loans to cover labour costs has also decreased. In September, 53 percent of farmers reported using credit to meet labour expenses, but by November, this had fallen to 47 percent.
This decline suggests that farmers may be adjusting their labour budgets or finding alternative financing as economic pressures continue to pile.
The survey paints a picture of shifting trends in the farmers' borrowing appetite for different products, though it has not explained the causes for the trends across different lenders.
A November report by the Financial Sector Deepening Kenya says that “many smallholders and micro, small and medium enterprises do not have sufficient collateral for a lender to extend credit against despite a good number of them having incomes and business cash flows, that ideally, demonstrate their ability to repay a loan obligation.”
