Africa seeks innovative financing to empower smallholder farmers

It is a strong commitment towards strengthening rural and agricultural finance systems across Africa. At the African Rural and Agricultural Credit Association, this is part of a mission that we have pursued for the last 49 years.

At the centre of this effort are smallholder farmers, who are the backbone of food security on the continent. However, many of them still struggle to access financing and credit facilities.

The Nairobi declaration is meant to ensure that farmers continue receiving support through improved access to finance. It is also about moving beyond conversations and ensuring that agricultural financing becomes practical and impactful.

We want to see stronger financial ecosystems that can support farmers, strengthen food systems and drive agricultural transformation across Africa.It will also bring together public development banks, financial institutions and de

velopment partners around a shared goal of closing Africa’s estimated USD 90 billion (Ksh11.62 billion) annual agriculture financing gap.

How will the declaration translate into practical support for farmers?

It will create financing channels through partnerships with development institutions such as the International Fund for Agricultural Development and the French Development Agency. The idea is to channel resources to financial institutions, which will then extend support to farmers through retail and wholesale banking systems.

The support will include long-term financing, short-term financing and technical assistance. We are also looking at strengthening the capacity of financial institutions so that they better understand agricultural systems and the realities farmers face.

Access to finance alone is not enough. Financial institutions must also understand agricultural production cycles and provide products that respond to farmers’ actual needs. Our objective is to ensure that financing reaches farmers in a sustainable and practical manner.

What are the key guiding pillars?

The declaration is anchored on three major pillars; resilient and sustainable agriculture, innovation, and climate adaptation.

We are focusing on building agricultural systems that can withstand the growing climate challenges affecting African farmers. Climate shocks such as droughts and floods continue to affect productivity, and financing systems must support resilience.

Innovation is also very important, especially in agricultural financing mechanisms. We need modern approaches that improve access to credit while reducing risks associated with agricultural lending.

Financial systems should not only provide loans but also support farmers in adopting climate-smart agricultural practices that improve resilience and productivity. Our focus is to ensure that credit systems positively impact smallholder farmers while strengthening agricultural sustainability across the continent.

Why do many financial institutions still consider agriculture a risky sector?

One of the biggest challenges is that many lenders do not fully understand agricultural cycles. Agriculture is very different from other sectors because returns are seasonal and heavily dependent on weather conditions, market prices and production timelines.

For example, in maize farming, some farmers are expected to begin repaying loans before they even harvest or sell their produce. That creates pressure on farmers because the financing structures are not aligned with agricultural realities.

At AFRACA, we are working with development partners and central banks to create supportive policy environments, strengthen capacity building and improve financing systems that are more responsive to agricultural production cycles.

There is a need for financial institutions to better appreciate how agriculture works so that lending products can be structured in a way that supports farmers instead of burdening them.

How does the declaration differ from previous commitments such as the Malabo, Maputo and Kampala declarations?

The difference is that this declaration is more action-oriented. Frameworks such as the Malabo Declaration, Maputo and Kampala Declarations encouraged governments to allocate at least 10 per cent of their national budgets to agriculture. However, implementation has varied widely across countries.

What we are doing now is going beyond advocacy. We are mobilising institutions and development partners that can directly support agricultural financing initiatives.

The declaration was read before representatives from 30 African countries during the Africa Forward Summit 2026 in Nairobi co-hosted by French and the Kenyan Governments, and our focus is to ensure that financing actually reaches farmers instead of remaining a policy discussion in boardrooms.

We want practical interventions that strengthen agricultural finance systems and support transformation across the continent.

What innovative financing mechanisms is AFRACA promoting to improve access to credit for smallholder farmers?

We are promoting innovative systems such as warehouse receipt systems and collateral registry systems. These mechanisms allow farmers to secure loans using non-traditional collateral such as livestock, household assets or future agricultural production.

Under warehouse receipt systems, for instance, farmers can store produce in certified warehouses and use the receipts as collateral for loans. This helps farmers avoid distress sales immediately after harvest and gives them more flexibility in accessing credit.

We have seen such systems work effectively in countries such as Zimbabwe and Ghana. In Kenya, there are ongoing efforts to strengthen similar frameworks.

These innovations are important because many smallholder farmers operate informally and do not have traditional assets like land titles required by conventional banks.

What role does value-chain financing play in AFRACA’s strategy?

It is very important because it simplifies lending processes and makes it easier for smallholder farmers to participate in formal financial systems. Through this approach, financing is structured around the various actors involved in agricultural production, processing, transportation and marketing.

It allows financial institutions to better understand agricultural cash flows and risks. The model also enables lenders to work with organised groups, cooperatives and agribusinesses linked to farmers, which improves efficiency and access to credit.

Although we have not proposed a specific minimum budgetary threshold under the declaration, AFRACA will continue working with financial institutions to package financing needs and connect them with development partners willing to support agricultural transformation across Africa.

We believe stronger partnerships and innovative financing systems are critical if Africa is to unlock the full potential of its agricultural sector.

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