CS Kagwe Calls for Additional Agriculture Funds at FINAS Summit

• Cs Kagwe Calls for Additional Agriculture Funds at Financing Agri-Foods Systems(FINAS)-2025 Summit

Agriculture Cabinet Secretary (CS) Mutahi Kagwe is advocating for increased agricultural funding, emphasizing its critical role for both economic prosperity and the well-being of every citizen.

Speaking at the FINAS-2025 (Financing Agri-Foods Systems) Summit in Nairobi, CS Kagwe underscored the central role of agriculture in ensuring food security, financial stability, and equitable development.

He urged the stakeholders like financial institutions, policymakers, and private sector actors to move beyond dialogue to action.

Despite agriculture contributing a significant percentage of Kenya’s GDP, CS Kagwe lamented that the sector is hugely underfunded.

Currently, 3 percent  of the national budget is spent on agriculture, which is far below the African Union-recommended 10 percent.

“We must collaborate with Parliament and the National Treasury to increase funding for the sector.

But above all, we must double our priorities, enhance the efficacy of the budget, and rework funding instruments to address farmers’ actual needs,” he noted.

Kagwe proposed 80 percent of the agricultural budget for direct funding to farmers and only 20 percent  for administration, emphasizing the need for direct impact at the grassroots level.

Kagwe also pointed to the huge finance gap that continues to plague African farmers, especially smallholders.

Despite the agriculture sector being central, only 3 percent of commercial bank credit in Kenya in 2023 was directed to agriculture out of a US$49 billion loan book.

He cited  reasons such as perceived high risk, lack of collateral, and underdeveloped rural capital markets.

He asked the  financial institutions to innovate and design products that address the realities of agriculture.

“Stop locking farmers in short-term, high-interest loans.

Lend at single-digit interest rates.

Think long term and encourage technology and contract farming adoption,” he stated.

He also recommended reviving an earlier abandoned requirement that banks reserve some of their assets for farm lending.

He emphasized the importance of smallholder farmers in sustaining Kenya’s food systems, calling for specially crafted financial products to address their unique realities and challenges, especially in rural and underserved regions.

“Banks need to develop products that are affordable, accessible, and encompass the farm cycles. We should enable an environment where smallholder farmers can innovate and expand,” he added.

As a counter to the shortage of capital, Kagwe proposed establishing a government-funded agriculture fund similar to Constituencies Development Fund (CDF) and Political Parties Fund.

The fund would be managed  through Agricultural Finance Corporation (AFC), which he stated has a proven track record but currently only caters to 25 percent of sector demand.

“By recapitalizing AFC and establishing a dedicated fund from the exchequer, we will provide farmers with long-term, stable financing options.

This is the kind of structural transformation the sector needs,” he said.

Kagwe’s closing remarks called for an enabling private sector investment in agriculture, saying that long-term sustainable food systems demand a collaborative effort.

“Let us join hands and create an inclusive, innovative, and sustainable financing environment.The future of our country depends on this,” he said.

The summit attracted a cross-section of stakeholders to include government officials, development partners, financial institutions, as well as farmer representatives, all echoing the call for increased investment and change in Kenya’s agriculture sector.