Agriculture remains one of Kenya’s most important economic sectors, supporting millions of livelihoods while contributing significantly to employment, food security, export earnings and economic growth. Access to affordable financing plays a critical role in enabling farmers to purchase quality seeds, fertilizers, farm equipment and other essential inputs each planting season. For many years, the government has supported agricultural production through multiple state agencies that operated separate lending programmes. While this approach expanded access to credit, it also created overlapping mandates, inconsistent lending practices and challenges in monitoring the use and recovery of public funds.
To improve efficiency and strengthen financial oversight, the government is proposing to consolidate agricultural lending under a single specialized institution. Under the proposed Crops Laws (Amendment) Bill, 2026, currently before Parliament, lending functions would be transferred from the Kenya Agricultural and Livestock Research Organization (KALRO), the Tea Board of Kenya, and the Kenya Sugar Board to the proposed Kenya Agribusiness Development Corporation (KADCO) Limited. The new institution is intended to become the government’s central agency for agricultural finance, providing a more coordinated approach to public lending within the sector.
The proposed reforms seek to address weaknesses that emerged under the existing framework. Many of the agencies responsible for agricultural lending were originally established to regulate industries, promote commodity development, or undertake agricultural research rather than manage financial institutions. Consequently, loan administration, monitoring, and debt recovery often lacked the specialized financial systems and expertise required to manage large public credit portfolios effectively.
The sugar sector illustrates some of these challenges. The Kenya Sugar Board financed part of its lending programmes through the 4.0% Sugar Development Levy, charged on the factory value of locally produced sugar and imported sugar. The levy was designed to create a revolving fund that would provide affordable credit to sugarcane farmers while supporting investment across the industry. However, weaknesses in loan monitoring and recovery gradually reduced the effectiveness of the programme limiting the fund’s ability to recycle capital for future lending.
Parliamentary records and audit findings indicate that unpaid loans under the government’s sugar credit programme had reached an estimated Kshs 3.7 billion by 2024. The Auditor General attributed a significant proportion of these outstanding balances to loans issued without adequate security, making debt recovery increasingly difficult. As repayment levels declined, the revolving credit fund became less sustainable, reducing the amount of capital available for new lending while increasing pressure on the government to strengthen accountability and financial oversight.
The proposed establishment of the Kenya Agribusiness Development Corporation (KADCO) Limited aims to address these challenges by placing agricultural lending under a single institution with a dedicated financial mandate. Centralizing loan administration is expected to improve credit assessment, strengthen monitoring systems, enhance debt recovery and promote more efficient management of public agricultural finance.
For farmers, cooperatives and agribusinesses, the reforms could simplify access to government supported credit by providing a more streamlined lending process. A centralized institution may also improve consistency in lending policies while increasing confidence in the management of public agricultural financing programmes.
Overall, the proposed agricultural lending reforms represent one of Kenya’s most significant institutional changes in public agricultural finance in recent years. By consolidating lending responsibilities from three state agencies into the proposed Kenya Agribusiness Development Corporation, the government aims to strengthen financial accountability, improve loan recovery and create a more sustainable agricultural credit system. If successfully implemented, the reforms could enhance the long-term effectiveness of government backed agricultural financing while supporting productivity and investment across Kenya’s agricultural sector.
