Farming is an important source of livelihood and food security, but farming livelihoods are in decline.
This may partly reflect the precarity of rural economies and low levels of investment in agricultural value chains. Farmers are exposed to increasing levels of vulnerability, partly due to climate change. FinAccess 2021 showed that 37% of farmers experienced drought and 35% experienced challenges from pests and disease.
Farmers perceived they have little choice when it comes to finance for farming, relying mainly on mutuals and social finance. Aside from income reinvested, friends and family and chamas are the top sources of finance for farming, especially for women; and cash crop farmers are more likely than the population average to use SACCOs.
FinAccess 2021 also found that farmers have relatively low levels of digital and financial capability.. What does this mean in terms of leveraging digitisation to improve farming livelihoods and climate resilience? At the same time, over a quarter use digital payments for inputs and supplies suggesting opportunities to build digital and financial capabilities and leverage digital technology to help farmers better address their needs.
Finally, are we financing farmers or farming? The top goals for farmers are education and business, suggesting that farmers rely on multiple income streams and invest in a range of economic opportunities other than farming. Better finance for farmers needs to be tailored to diverse income streams and investment goals, as well as multiple vulnerabilities including climate change.
How can financial service providers take advantage of the multi-billion-shilling opportunities that Kenya’s 700,000 cash crop and 2.9 million food crop farmers represent, to enable these farmers to manage risk, invest in livelihoods and develop their futures?