The government has unveiled plans to merge the Agricultural Finance Corporation (AFC) and the Commodities Fund in a bid to strengthen financial support for farmers and enhance efficiency in agricultural financing.
Agriculture Cabinet Secretary Mutahi Kagwe made the announcement on Wednesday, October 28, during the 8th World Congress on Rural and Agricultural Financing hosted by the African Rural and Agricultural Credit Association (AFRACA) in Mombasa.
The AFC, a government-owned development finance institution, provides loans and other financial services to Kenya’s agricultural sector, while the Commodities Fund offers affordable credit to the crops sector and invests in raw materials such as energy, metals, and agricultural products.
According to CS Kagwe, merging the two state entities will streamline operations and ensure farmers access sustainable, long-term credit facilities.
“We should stop locking farmers into short-term, high-interest facilities and instead take a long-term view. Lend at low interest rates and encourage farmers to adopt modern methods by embracing technology,” Kagwe said.
“It therefore makes sense to support the agricultural sector by setting up a similar fund for the Agricultural Finance Corporation.”
The CS also called for the reinstatement of a policy that required financial institutions to allocate a mandatory percentage of their assets to agricultural lending. He argued that this policy, once reintroduced, would create a reliable funding pool offering capital at single-digit interest rates.
Additionally, Kagwe revealed that the ministry is setting up a Projects Implementation Monitoring Unit (PIMU) to enhance oversight and track investments within the agricultural sector.
The proposed merger aligns with the government’s broader agenda of transforming agriculture into a modern, technology-driven, and financially inclusive sector capable of driving Kenya’s economic growth and ensuring food security.
