Kenya is preparing to launch an ambitious Ksh100 billion green bond programme aimed at transforming the country’s struggling agriculture sector and shielding farmers from worsening climate shocks.
Under the plan, the government will issue green and climate bonds by 2027 at subsidised interest rates of between four and six per cent, in what officials describe as one of the most aggressive agricultural financing overhauls in recent years.
According to documents seen by Kenyans.co.ke, the bonds will finance climate-smart farming projects, including solar-powered cold storage systems, regenerative farming initiatives, and agricultural infrastructure aligned with Kenya’s National Climate Change Action Plan.
The Treasury-backed bonds will carry maturities of between five and 10 years and will be partially secured using revenues generated from carbon credits.
“Issued by the National Treasury for sustainable projects like solar-powered cold chains and regenerative farming. Bonds have 5–10 year maturities, below-market interest rates (4–6%), and are backed by carbon credit revenues,” part of the document stated.
The initiative falls under the National Agriculture Sector Investment Plan (NASIP), a broader government framework designed to attract billions in private capital into Kenya’s agricultural economy while reducing the financial risks that have long discouraged lenders.
Officials hope the strategy will dramatically shift Kenya’s agricultural funding model, with the private sector expected to contribute at least 45 per cent of agricultural financing by 2030.
The move comes amid growing concern over the state of Kenya’s farming sector, where millions of small-scale farmers continue to struggle with limited access to credit, delayed state payments, rising production costs, and increasingly unpredictable weather patterns.
For decades, agriculture has been viewed by banks as a high-risk sector, leaving many farmers locked out of formal financing. Current estimates indicate that fewer than 10 per cent of smallholder farmers can access bank loans, severely limiting investment and threatening national food security.
To counter those risks, the government is deploying a large-scale credit guarantee scheme through the Agricultural Finance Corporation in partnership with the African Development Bank and the International Fund for Agricultural Development.
Under the arrangement, up to 50 per cent of loan risks will be covered, with the programme targeting between Ksh100 billion and Ksh150 billion in guaranteed loans over the next five years.
Women and youth-led enterprises are expected to be major beneficiaries, with at least 40 per cent of all guarantees reserved for businesses owned by young people and women as part of the inclusivity targets outlined in NASIP.
The government will also closely monitor repayment rates under the programme, requiring them to remain above 85 per cent to ensure sustainability and avoid burdening taxpayers.
In addition to domestic financing, Kenya is set to receive substantial backing from international climate financiers, including the Green Climate Fund, the Adaptation Fund, the European Union, and the Japan International Cooperation Agency.
The partners are expected to provide up to Ksh50 billion annually in concessional loans at interest rates as low as two to four per cent.
Counties are also expected to play a major role through the proposed County Agricultural Investment Fund (CAIF), which will provide agri-tech startups with seed funding ranging from Ksh10 million to Ksh50 million per venture.
The fund is targeting investor returns of between 15 and 20 per cent through exits such as Initial Public Offerings (IPOs), while maintaining a financial reserve of between 10 and 15 per cent to cushion farmers against climate-related shocks and market disruptions.
The sweeping reforms underline the government’s growing urgency to modernise agriculture as Kenya battles food insecurity, erratic rainfall, and mounting pressure to transition towards a greener economy.
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