The Government has called for innovative financing models to expand irrigation, unlock affordable credit for smallholder farmers and accelerate investment in Kenya’s agricultural sector.
Principal Secretary for Irrigation, Ephantus Kimotho, said traditional collateral-based lending was no longer sufficient to meet the financing needs of smallholder farmers, urging financial institutions to use data, technology and risk-sharing mechanisms to make farmers more bankable.
Kimotho spoke in Nairobi during a session on “Closing the Missing Middle – Agricultural Lending, Risk Instruments, FinTech, and Matching Farmer Needs” at the Eastern and Southern Africa Private Sector Forum on Irrigation.
He said better integration of farmer, production, irrigation, transaction and market data could enable lenders to assess the actual creditworthiness of farmers and develop financing products tailored to their needs.
“Significant farmer data already exists across government, financial institutions, mobile platforms and private-sector technology providers. The challenge is to connect and responsibly utilise this information to support better financing decisions,” Kimotho said.
He noted that linking farmer profiles with production records, irrigation infrastructure, transaction histories, market arrangements, cash flows and performance data could strengthen credit scoring and allow lenders to assess farmers based on their repayment capacity rather than traditional collateral.
According to the PS, digital platforms and farmer-facing applications also have the potential to reduce information gaps, transaction costs and risks associated with lending to smallholder farmers.
Kimotho urged irrigation equipment suppliers and technology companies to engage early with government, financiers and farmers as preparations continue for the planned rollout of irrigation interventions in April 2027.
He also called on technology providers to conduct adequate demand assessments to establish farmers’ ability and willingness to pay for irrigation technologies while developing appropriate market incentives to improve uptake.
The PS further highlighted the importance of blended finance, guarantees and other risk-sharing instruments in attracting private capital into irrigation.
He said irrigation should be treated as a productive investment capable of increasing agricultural productivity, raising household incomes and strengthening farmers’ resilience to climate change.
However, Kimotho cautioned that financing alone would not deliver the desired results, saying irrigation investments must be accompanied by technical support, appropriate technologies, reliable markets and secure offtake arrangements.
“These interventions are necessary to ensure farmers generate sufficient returns to service the financing they receive,” he said.
Kimotho called for a simplified financing architecture through which concessional funds, guarantees and other risk-sharing mechanisms can reach farmers and productive irrigation projects more efficiently.
He said the Government would continue working with development partners and the private sector to mobilise capital, strengthen risk-sharing mechanisms and scale up productive irrigation finance.
The initiative, he said, would support efforts to expand irrigated agriculture, boost food security and improve the livelihoods of smallholder farmers.
The session brought together key players in agricultural finance and technology, with the panel comprising Erastus Njoroge of Kenya Development Corporation, Raphael Kuria of YAPU Solutions Kenya, Anne Njeru of Safaricom DigiFarm and Madleine Mwithiga of ADAPTA Earth.
by Joseph Ng’ang’a
