Farmers have ditched state-backed Hustler Fund and microfinanciers turning to big banks and Fuliza for credit to finance agricultural activities.
A new Central Bank of Kenya (CBK) survey shows that 11 per cent of producers who were borrowing from the Hustler Fund as of March 2025 and 13 per cent who took cash from microfinance institutions, had dropped off from the products by May.
The study shows that no farmer interviewed in May indicated to have been borrowing from the two products, even as they also stopped taking money from cooperative societies and informal lenders.
“The proportion of sampled farmers reporting to have accessed credit for farming remained below 40 per cent. It stood at 34 per cent in May 2025 and 36 per cent in March 2025,” said the survey.
The survey in May shows that the majority of farmers are now opting for banks, the shift coming at a time when lenders have been lowering interest rates on credit on pressure from CBK.
The proportion of farmers borrowing from banks rose from 41 per cent in March to 58 per cent in May, as more farmers increased borrowing from digital loans such as Fuliza and KCB MPesa, which witnessed growth from two per cent of farmers in March, to eight per cent in May.
The CBK survey noted that sources of credit to farmers that witnessed growth between March and May also included buyers of farm produce (11 per cent to 16 per cent of farmers), and informal savings and credit groups (nine to 16 per cent).
Borrowing from savings and credit cooperative societies (saccos), however, dropped from 35 per cent to 24 per cent over the same period.
“The main sources of credit to farmers are banks, saccos, family and friends, buyers of farm produce, and digital credit providers,” the CBK survey says.
It 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.
In terms of utilising the loans, most farmers are also going slow on using borrowed funds to buy inputs such as fertiliser, seeds, and pesticides, with a drop from 94 per cent of the growers in March to 84 per cent in May.
The ratio of farmers using loans to defray labour costs also dropped from 62 to 57 per cent, even as those borrowing to buy equipment and machinery rose from 25 to 41 per cent.
“Use of credit to expand farmland and diversify production ranked low,” the survey stated.
The Hulster Fund, one of President William Ruto’s pet projects, is meant to provide low-income Kenyans access to financial services.
These include credit, savings, insurance, and investment products for the unserved and underserved population. The fund has been issuing loans of between Sh500 and Sh50,000 to individuals for a tenure of 14 days at an interest rate of eight percent per annum.
Five percent of the disbursement to each borrower has been withheld as savings whereas 70 percent has been retained as long-term savings with the balance making up short-term savings.
