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Central Bank of Kenya [File, Standard]
Smallholder farmers in Kenya are being locked out of formal credit not because they are risky borrowers, but because banking regulations are structurally biased against agriculture, a senior finance expert has said, as the country prepares to host a continental summit on food systems financing.
Jared Ochieng, Agriculture and Processing Finance Lead at FSD Kenya, told Standard on Sunday in a virtual interview that banks allocate only 3.2 to 3.6 per cent of lending to the agriculture sector despite evidence showing farmers have lower default rates than other borrowers.
"How can you have the lowest debt default, but finance is not flowing to you, and you are also classified as the riskiest?" Ochieng said. "Farmers are the most financially literate people. If somebody makes that complex decision, ‘I have this cow, my kid is going to school in January, I need to sell it in December but keep this chicken to stay stable,’ that person is not going to default. Their livelihood depends on it."
