CS Kagwe calls for lenders to reduce lending rates to 3% for farmers' benefit

Agriculture Cabinet Secretary Mutahi Kagwe has called for donors to reform their agricultural financing models, saying farmers will never achieve meaningful growth unless credit becomes affordable and donor funding is restructured to deliver direct impact at the farm level.

Speaking during the Intergovernmental Agriculture Forum in Naivasha, the CS said the government is pushing for low-interest agricultural loans capped at between 3 to 4 per cent, arguing that current borrowing rates are locking farmers out of production. 

“Financing guarantees must help us de-risk farmers. That percentage has to come down. I am proposing 4 per cent, even 3 per cent, if we truly want affordability,” he said, noting that loan terms must be aligned to farmers’ realities, seasonal cash flows, and commodity production cycles.

Kagwe added that donors must put an end to generic financing models that fail to reflect agricultural dynamics.

“When we design loan terms, they must reflect the realities of what farmers produce, not abstract banking models. Financing must meet farmers where they are,” he said.

The CS also issued a sharp message to development partners, insisting that Kenya will no longer accept project designs where administrative costs overshadow actual investment in farmers.

“To our donor community: we need clear KPIs. There is too much self-declared success, everyone claiming miracles, even 50 per cent increases in maize yields that do not exist,” he cautioned.

Kagwe called for a shift in investments, citing that capacity-building programmes must bring value to farmers. 

“Let’s forget capacity building. We have built enough capacity. What we need now is investment that actually reaches the farmer,” he noted.

The CS proposed a strict ratio for donor-supported agricultural programmes, 80 per cent of all funds must go directly to farmers, while only 20 per cent should be used for administration and logistics.