BY DR. CHRIS KIPTOO, CBS Principal Secretary, The National Treasury
Transforming Kenya’s agrifood systems will require more than increasing agricultural production. In the spirit of this year’s World Food Day theme, “Innovate Today; Nourish Tomorrow”, we must also innovate in how we finance that transformation. This means mobilising sustainable and innovative financing that enables farmers, agribusinesses and rural enterprises to invest, grow and withstand increasing frequent economic and climate shocks.
Government financing alone cannot meet the scale of investment required. We must therefore use public and development finance more strategically to reduce the risks associated with agricultural investment and crowd in additional private capital. This means addressing some of the barriers that have historically constrained lending to agriculture, including perceived high risks, limited collateral, climate vulnerability and the high cost of serving dispersed rural clients.
Through its partnership with the International Fund for Agricultural Development (IFAD), the Government is implementing the Rural Kenya Financial Inclusion Facility (RK-FINFA) to deepen financial inclusion and expand access to appropriate and affordable financial services for rural households and enterprises.
The programme is promoting innovative financing instruments, including a wholesale green finance facility and credit guarantee mechanisms, and working in partnership with commercial banks and rural financial institutions, including Savings and Credit Co-operative Organisations (SACCOs). By strengthening these partnerships and sharing risk, RK-FINFA seeks to unlock greater lending to agriculture and rural enterprises, particularly those that are underserved by conventional financial markets.
Looking ahead, we must scale-up blended finance approaches that bring together Government, development partners, financial institutions and private investors. Public and concessional resources should increasingly be used where they can address risk, strengthen viable agricultural value chains and unlock additional investment that would otherwise not reach rural areas.
Importantly, this financing must be inclusive and climate-responsive. Women and young people should be able to access the capital, financial products and business opportunities they need to participate meaningfully in agrifood value chains. At the same time, financing must support climate-smart technologies, water management, insurance and other investments that strengthen resilience against droughts, floods and increasingly unpredictable weather, while sustaining food production, rural livelihoods and nutrition.
As we mark World Food Day, Kenya has an opportunity to build an agrifood financing ecosystem in which public finance catalyses rather than substitutes private investment. By reducing risk, mobilising capital and directing finance towards productive, inclusive and climate-resilient investments, we can unlock the potential of our farmers and agribusinesses and build a more resilient and food-secure Kenya. Innovating in how we finance agriculture today will be essential to nourishing Kenya tomorrow.