Agriculture Cabinet Secretary Mutahi Kagwe has urged stakeholders in the sector to support increased funding to address the myriad of challenges the industry faces.
Currently, most African governments, including Kenya, allocate only three percent of their national budgets to agriculture.
According to CS Kagwe, this should be increased to at least 10 percent to effectively tackle food insecurity and hunger.
Speaking on Tuesday, May 20, while officially opening the Financing Agri-Food Systems Sustainably (Finas 2025) Summit at KICC in Nairobi, Mr Kagwe lamented that the sector continues to suffer from underfunding despite its massive contribution to Kenya’s economy.
The CS pledged to push for an increase in the allocation from the current three percent to 10 percent of the national budget.
“Despite contributing a staggering 50 percent to our GDP—22.5 percent directly and an additional 25 to 30 percent through indirect linkages, agriculture currently receives only three percent of the national budget. This is unacceptable. I am committing to gradually raise this allocation to 10 percent,” Mr Kagwe said.
He added that the increase would align Kenya with the Malabo Declaration (2014) and the Kampala Declaration of January 2025, which recommend that governments allocate 10 percent of their national budgets to agriculture.
The additional funding, he said, would help achieve transformative outcomes, including a 45 percent boost in agricultural productivity, elimination of post-harvest losses, and a threefold increase in intra-African trade in agricultural products by 2035.
In 2024, Kenya recorded a nominal GDP of Sh16.224 trillion, with agriculture cited as the highest contributor to this growth.
The Finas 2025 Summit brought together a diverse group of African and international stakeholders under the theme “Taking Ownership: Rethinking Sustainable Financing for Africa’s Food Systems.”
The three-day event explored key strategies to transform Africa’s agri-food systems by bridging the significant financing gap and fostering innovative, inclusive, and resilient agricultural solutions.
Despite being the backbone of the agricultural sector, smallholder farmers have long struggled to access funding from financial institutions, largely due to the perceived risks associated with the informal nature of agriculture.
Kagwe decried the negligible support from commercial banks, revealing that only three percent of the US$49 billion in loans issued by banks in 2023 went to the agriculture sector.
“This is a sad indictment. We know the reasons—high perceived risk, lack of collateral, and underdeveloped rural capital markets, but it no longer needs to be this way,” he said.
He called on financial institutions to rethink their approach and innovate around farmers’ real needs.
CS Kagwe urged banks to shift from short-term, high-interest loans to long-term, low-interest financing solutions tailored to the seasonal cycles of agriculture.
He also proposed reinstating policies that require financial institutions to allocate a fixed percentage of their assets to agriculture.
“This rule was once in place, and I am today calling for its reinstatement. This aggregated pool of funds could provide the affordable, accessible capital the sector desperately needs,” he explained.
Mr Kagwe further supported the creation of a dedicated, exchequer-funded agriculture finance kitty, modelled after existing structures such as the Political Parties Fund (allocated 0.3 percent of national revenue) and the Constituency Development Fund (CDF), which receives 2.5 percent.
In her remarks during the Finas 2025 opening, East African Community (EAC) Secretary-General Veronica Nduva highlighted the immense potential of the agri-food value chain.
EAC Secretary-General Veronica Nduva. Photo | Pool
She emphasized its role as the backbone of EAC partner states in driving economic growth, providing livelihoods, and fostering regional development.
“In line with the EAC Regional Agriculture Investment Plan and our mutual accountability framework, we recently held a critical dialogue on the outcomes of the Regional Joint Agricultural Sector Review (JSR), with a special focus on youth involvement in agri-food systems. The review revealed systemic challenges, including underfunding of policy implementation and delays in enacting regulations to support youth participation,” she said.
She noted that barriers such as limited access to land, skills, and capital disproportionately affect youth, particularly those facing bureaucratic hurdles.
However, she welcomed the conference’s focus on inclusive food systems policies and youth empowerment through the Youth A-Gender initiative.
Building on the recommendations from Finas 2024, the Kenyan government is finalizing a Policy and Legal Framework on Agricultural Financing and Subsidy Management.
The framework aims to improve risk management, ensure transparent subsidy allocation, and expand private sector participation, with technology as a key driver.
In addition, the government plans to recapitalise the Agricultural Finance Corporation (AFC) and merge it with the Commodities Fund to strengthen the institution’s ability to meet capital demands in the sector.
Sustainable agricultural transformation, CS Kagwe emphasized, will require collaboration between government, financial institutions, and the private sector, all supported by a robust, data-driven digital ecosystem.
One of the initiatives is the Kenya Integrated Agriculture Management Information System, which has already digitally profiled over 6.4 million farmers – who are currently receiving subsidised fertiliser.
