Kenyan farmers are shifting away from the government-backed Hustler Fund and microfinance lenders, turning instead to banks and digital loans to finance their agricultural activities.
A recent Central Bank of Kenya (CBK) survey shows that by May 2025, none of the farmers interviewed were borrowing from the Hustler Fund or microfinance institutions. In March, 11 percent of farmers relied on the Hustler Fund, while 13 percent had loans from microfinance banks. The decline also affected cooperatives and informal lenders.
Meanwhile, traditional banks are gaining ground. The share of farmers borrowing from banks rose sharply, from 41 percent in March to 58 percent in May. Digital credit platforms such as Fuliza and KCB M-Pesa are also growing in popularity, moving from 2 percent to 8 percent over the same period.
Other sources of credit, including buyers of farm produce and informal savings groups, have also become more significant, each accounting for 16 percent of farmers. Sacco lending, once a major source of financing, declined from 35 percent to 24 percent.
“The main sources of credit for farmers are banks, family and friends, buyers of farm produce, digital lenders, and, to a lesser extent, sacco institutions,” the CBK survey notes.
How farmers are spending their loans
The survey highlights a noticeable change in how farmers use borrowed funds. Fewer farmers are using loans to buy inputs such as seeds, fertiliser, and pesticides, dropping from 94 percent in March to 84 percent in May. Loans for farm labor also declined from 62 percent to 57 percent.
At the same time, borrowing for machinery and equipment rose sharply, from 25 percent to 41 percent, suggesting a growing focus on mechanization. Credit for expanding farmland or diversifying production remains low.
The struggle of the Hustler Fund
The Hustler Fund was launched to provide affordable credit, savings, and investment opportunities for low-income Kenyans, including youth and women. Loans range from Sh500 to Sh50,000 with a 14-day repayment period and an 8 percent annual interest rate. A portion of each loan is retained as short-term and long-term savings.
Despite these benefits, the CBK survey indicates that the fund is losing appeal among farmers. Its short repayment window and strict savings requirements may be factors driving borrowers to banks and digital platforms, which offer more flexible terms.
A changing credit landscape
The CBK survey paints a picture of farmers re-evaluating their borrowing options. While the Hustler Fund and microfinance banks struggle to retain clients, traditional banks and digital lenders are stepping in to meet the demand. For many farmers, these channels now offer a more practical route to funding, whether for mechanization, input purchase, or other farm investments.
The trend reflects a broader shift in Kenya’s agricultural financing, where convenience, flexibility, and competitive terms are increasingly determining where farmers put their trust — and their money.
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