Women-led farmer groups in Kenya’s Homa Bay County are set to gain improved access to agricultural financing following the launch of a US$7.5 million de-risking programme by Co-operative Bank of Kenya and CARE International Kenya, a partnership aimed at addressing one of the most persistent barriers to agricultural productivity—limited access to affordable credit for women smallholder farmers.
The two organisations signed a Memorandum of Understanding (MoU) in Kisumu to establish a guarantee fund that will reduce lending risks for financial institutions while enabling women farmers to access loans with significantly lower collateral requirements. The initiative will initially be piloted in Homa Bay County before a possible expansion to other parts of Kenya, reflecting growing efforts to strengthen financial inclusion, improve agricultural productivity and support rural economic development.
The programme comes at a time when Kenya is placing greater emphasis on expanding access to finance for micro, small and medium-sized enterprises (MSMEs), cooperatives and smallholder farmers as part of broader strategies to enhance food security, climate resilience and inclusive economic growth. According to the World Bank, agriculture contributes approximately one-third of Kenya’s Gross Domestic Product (GDP) and provides employment for more than 40% of the country’s population, while supporting the livelihoods of nearly 70% of rural households. Yet despite the sector’s economic importance, access to formal agricultural finance remains limited, particularly for women farmers who often lack the collateral required by commercial lenders.
The pilot programme will initially support 21 women farmer groups in Homa Bay County, each comprising around 20 members. These groups will be coordinated through an agricultural cooperative responsible for facilitating access to financial services, supporting loan administration and strengthening linkages between farmers and the banking system.
Under the guarantee mechanism, CARE International Kenya will help absorb part of the lending risk, allowing Co-operative Bank to extend credit to farmers who might otherwise be excluded from formal financial services. The financing is expected to support investments in agricultural inputs, farm equipment, irrigation technologies, post-harvest infrastructure and other income-generating activities that improve farm productivity and strengthen household incomes.
David Akumi, Head of Business Banking at Co-operative Bank Kenya, said the guarantee fund aligns with the bank’s longstanding commitment to Kenya’s cooperative movement and agricultural sector while demonstrating how risk-sharing mechanisms can unlock financing for underserved communities.
“The guarantee fund allows us to lend with confidence to women farmer groups who have historically been locked out by collateral requirements. We expect this model to demonstrate strong repayment performance and to inform how we scale similar facilities across other counties,” Akumi said.
The initiative reflects an increasingly important trend in African agricultural finance, where blended finance mechanisms, guarantee facilities and development partnerships are being used to reduce investment risks while expanding access to credit for smallholder producers.
According to the African Development Bank (AfDB), Africa faces an agricultural financing gap estimated at more than US$65 billion annually. Smallholder farmers, who produce the majority of the continent’s food, frequently encounter difficulties accessing commercial credit due to limited collateral, informal land ownership systems, weather-related risks and volatile agricultural markets.
Women face even greater challenges. According to the Food and Agriculture Organization (FAO), women account for nearly half of the agricultural labour force in sub-Saharan Africa, yet they consistently have lower access to land ownership, financial services, extension support and productive inputs than men. The organisation estimates that closing these gender gaps could significantly increase agricultural productivity while strengthening food security and reducing rural poverty.
CARE International Kenya says the new partnership seeks to directly address these structural barriers by improving access to affordable financing for women-led agricultural enterprises. Country Director Gertrude Misango said limited access to affordable credit continues to constrain women farmers despite their significant contribution to Kenya’s agricultural production. She noted that the partnership aims to bridge that financing gap while strengthening women’s economic participation, increasing household incomes and supporting the growth of women-owned agribusinesses.
Beyond expanding access to loans, the programme is expected to encourage investment in improved seeds, fertilisers, mechanisation, irrigation technologies and climate-smart agricultural practices that help farmers adapt to increasingly unpredictable weather conditions.
Climate resilience has become an increasingly important consideration for Kenya’s agricultural sector. According to the Kenya National Bureau of Statistics (KNBS), agriculture remains highly dependent on rainfall, making production vulnerable to prolonged droughts, erratic rainfall patterns and rising temperatures linked to climate change. Strengthening access to finance enables farmers to invest in irrigation systems, water harvesting technologies, drought-tolerant crop varieties and other resilience measures that improve long-term productivity.
Development finance institutions have increasingly recognised agricultural finance as a critical component of climate adaptation strategies across Africa. The International Fund for Agricultural Development (IFAD) has consistently argued that expanding financial inclusion for rural communities strengthens food systems while enabling farmers to adopt sustainable agricultural technologies capable of increasing productivity without degrading natural resources. Kenya has introduced several initiatives in recent years aimed at improving agricultural financing, including blended finance programmes involving commercial banks, development partners and government agencies. The latest partnership between Co-operative Bank and CARE International adds to this growing ecosystem by specifically targeting women-led farmer organisations through a guarantee model designed to reduce commercial lending risks.
The cooperative movement also plays a central role in the initiative. Kenya has one of Africa’s most developed cooperative sectors, with millions of members participating in savings, credit, dairy, coffee, tea and agricultural cooperatives. According to the Ministry of Cooperatives and MSME Development, cooperatives contribute significantly to national savings, financial inclusion and agricultural marketing while serving as an important channel for rural economic development.
By leveraging cooperative structures alongside commercial banking, the programme seeks to strengthen both financial access and institutional support for participating farmers. If the Homa Bay pilot demonstrates strong repayment performance and measurable improvements in agricultural productivity, the partners intend to expand the guarantee fund to additional counties, potentially creating a scalable financing model for women smallholder farmers across Kenya.
For Africa, the initiative illustrates how partnerships between financial institutions and development organisations are increasingly being used to address structural financing constraints that limit agricultural growth. As governments seek to modernise agriculture, strengthen food security and improve climate resilience, expanding access to affordable credit—particularly for women farmers who form the backbone of rural food production—will remain central to achieving sustainable agricultural transformation and inclusive economic development.
