The government has set a bold target to raise Ksh100 billion through green and climate bonds by 2027, as part of a sweeping plan to overhaul how Kenya invests in and grows its agriculture sector.
According to a document seen by Kenyans.co.ke, the National Treasury will issue bonds at below-market interest rates of 4 to 6 per cent, with maturities of 5 to 10 years, backed by revenues generated from carbon credits.
Among the projects earmarked for the funding are solar-powered cold chains and regenerative farming, all tied to Kenya’s National Climate Change Action Plan and aimed at making the country’s food systems more resilient.
“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,” stated the document in part.
A photo of rain on a farm.
Photo
Meridiano
The bonds are part of the National Agriculture Sector Investment Plan (NASIP), a framework that blends public, concessional, and private capital to reduce investment risks and scale high-impact farming projects.
NASIP’s wider goal is to have at least 45 per cent of its funding come from private sources by 2030, moving Kenya toward a model in which the private sector takes a leading role in agriculture.
Despite the ambitious goal, the document notes that a longstanding barrier to achieving it is lenders’ view of agriculture as too risky, a problem the government is now directly addressing through credit guarantees managed by the Agriculture Finance Corporation.
To raise the bonds, the Agricultural Finance Corporation (AFC) – Kenya’s leading wholly government-owned Development Finance Institution (DFI), partnering with the African Development Bank and International Fund for Agricultural Development (IFAD), will cover up to 50 per cent of loan risks, targeting a total of between Ksh100 billion and Ksh150 billion in guaranteed loans over five years.
Of note, women and youth are a core focus of the plan, with at least 40 per cent of all loan guarantees reserved for enterprises led by women and young people, in line with NASIP’s inclusivity goals.
Repayment rates will be tracked quarterly and must remain above 85 per cent, ensuring the guarantee scheme remains financially sound and continues to serve more borrowers without becoming a burden on public funds.
Climate funds, including the Green Climate Fund (GCF), the Adaptation Fund, and bilateral partners such as the European Union (EU) and Japan International Cooperation Agency (JICA), will disburse Ksh50 billion annually in low-interest loans at rates of 2 to 4 per cent.
This does not mean that counties will be left out in the plan, as the County Agricultural Investment Fund (CAIF) will offer agri-tech startups seed capital of between Ksh10 million and Ksh50 million per venture, targeting projected investor returns of 15 to 20 per cent through exit options such as Initial Public Offerings (IPOs).
The same fund sets aside a 10-15 per cent reserve to buffer against financial shocks and shield farmers from uncertainty, especially during tough climatic conditions.
Kenyan farmers have for long faced severe credit constraints, with less than 10 per cent of smallholders accessing formal bank loans, and persistent payment delays from state agencies. These bottlenecks in the long run limit investment, lower yields, and threaten food security across the country.
A tea farmer in the field.
Photo
Kenya Tea Development Agency
