Farmers have cut their appetite for loans from banks in favour of seeking cash from friends and relatives to purchase farm inputs, a fresh Central Bank of Kenya (CBK) survey shows.

Central Bank disclosures show that despite a decline in the proportion of farmers borrowing from various groups of lenders between May and July this year, borrowing from friends and relatives remained high compared to that from banks, saccos, digital lenders, co-operative societies, Agriculture Finance Corporation (AFC) and the Hustler Fund.

According to the CBK survey, the proportion of farmers borrowing from friends and relatives remained at the highest level of 38 per cent in July, followed by commercial banks (21 per cent), buyers of farmer produce such as coffee and milk (19 per cent), saccos (17 per cent), and the Hustler Fund (five per cent).

The Central Bank of Kenya Haile Selassie Avenue.

Photo credit: DENNIS ONSONGO

“In terms of preferred sources of credit across farmers, borrowing from family and friends was reported by 38 per cent of the sampled farmers in July 2026 compared to 45 per cent in May 2026. Reported borrowing from commercial banks stood at 21 per cent of the sampled farmers in July compared to 32 per cent in May 2026,” the survey says.

Read: Family and friends overtake banks in loans to farmers

“Likewise, credit access from buyers of farm produce was reported by 19 per cent of the sampled farmers in July 2026 compared to 45 per cent in May 2026.”

The survey notes that farmers’ preferences on where to access credit may change from period to period depending on several considerations such as the effective cost of credit, ease of credit access, farmer awareness and information about the credit facilities, among other considerations.

According to the survey, the proportion of farmers who borrowed from digital lenders such as M-Pesa, KCB M-Pesa and Fuliza stood at 16 per cent in July, informal credit and savings groups (16 per cent), informal money lenders (nine per cent), co-operative societies (nine per cent), Agriculture Finance Corporation (five per cent) and Hustler Fund (five per cent).

The survey, however, shows that the proportion of farmers borrowing from friends and relatives declined from 45 per cent in May to 38 per cent in July, while that borrowing from banks fell from 32 per cent to 21 per cent in the same period.

The Hustler Fund is a revolving fund that is officially known as the Financial Inclusion Fund, and was launched in late 2022 as part of President William Ruto’s Bottom Up Economic Transformation Agenda. Under the fund, which also has a savings component, individual borrowers receive between Sh500 and Sh50,000 via their mobile phones.

Read: CBK survey: Farmers ditch Hustler Fund, go for Fuliza cash

The proportion of farmers borrowing from digital lenders declined to 16 per cent from 30 per cent, those borrowing from the AFC declined from seven per cent to five per cent, and the proportion of those borrowing from the microfinance institutions (MFI) dropped from seven percent to zero.

Borrowing from saccos

The proportion of farmers borrowing from saccos declined from 23 per cent to 17 per cent, while that of those borrowing from the Hustler Fund remained unchanged at five per cent.

The proportion of farmers borrowing from buyers of farm produce such as coffee and milk declined from 45 per cent to 19 percent; those borrowing from informal savings and credit groups declined from 27 per cent to 16 per cent.

The proportion of farmers borrowing from informal moneylenders grew to nine per cent from seven per cent, and the proportion of those borrowing from co-operative societies increased from five per cent to nine per cent.

According to the survey, the percentage of sampled farmers who reported having borrowed to finance agricultural activity was relatively higher at 34 per cent in July 2026 compared to 30 per cent in May 2026.

Read: Shifting credit patterns push farmers back to digital loans

However, the proportion of farmers who borrowed to finance activities declined in the last 12 months to 34 per cent in July 2026 from 41 per cent in July 2025

CBK says growth in commercial banks’ lending to the private sector remained strong at 10.2 per cent in July 2026 and 10.6 percent in June 2026, compared to negative 2.9 per cent in January 2025.

Average commercial banks’ lending rates stood at 14.3 per cent in July 2026, down from 14.4 per cent in June 2026 and 17.2 per cent in November 2024.

The proportion of farmers who used agricultural loans to meet labour costs stood at 49 per cent in July 2026 compared to 77 percent in May 2026, pointing to the significant role of labour costs in the production process.

According to the survey, farmers typically borrow to purchase farm inputs, with the proportion having borrowed for this purpose at 81 percent in July 2026 compared to 86 percent in May 2026.

The proportion reporting using agricultural loans to meet labor costs stood at 49 percent in July 2026 compared to 77 percent in May 2026, pointing to the significant role of labor costs in the production process.

The survey sampled 389 respondents from wholesale traders, retailers, and farmers in select towns across the country.

The farmers’ optimism about the overall economy improved in July 2026 relative to May 2026, mainly driven by favourable rainfall outcomes in some parts of the country, the expected improvement in output due to expected favourable rainfall in the fourth quarter of 2026, and expectations for strong performance of the non-agriculture sector supported by Government activities.

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