CS Kagwe calls for increase in budget allocation for Agriculture sector

Speaking at the Financing Agri-Food Systems Sustainably (FINAS) 2025 conference on Tuesday, Kagwe announced plans to collaborate with the National Treasury, Parliament, and other policymakers to significantly increase the sector's share of the national budget.

He emphasized that successful agricultural transformation would necessitate collaboration among government, financial institutions, and the private sector, as well as a strong digital and data-driven ecosystem. 

"Despite contributing a staggering 50% to our GDP—22.5 % directly and an additional 25-30% through indirect linkages—agriculture currently receives only 3% of the national budget," Kagwe stated.

"This is unacceptable. I am making an undertaking to increase this allocation gradually to 10%."

According to Kagwe, this increase would bring Kenya in line with the Malabo Declaration of 2014 and the Kampala Declaration of January 2025, while also enabling transformational outcomes such as a 45% increase in agricultural productivity, the elimination of post-harvest losses, and a threefold increase in intra-African agricultural trade by 2035.

CS Kagwe also lamented the lack of support from commercial banks, revealing that only 3% of the US$49 billion in loans issued by banks in 2023 went to the agriculture sector.

“We know the reasons—high perceived risk, lack of collateral, and underdeveloped rural capital markets—but it no longer needs to be this way,” he said.

He therefore called on financial institutions to recalibrate their approach and innovate around the real needs of farmers. 

He also urged banks to move away from short-term, high-interest credit models and embrace long-term, low-interest financing solutions tailored to the unique cycles of agricultural production.

The Agriculture CS proposed a return to policies requiring financial institutions to allocate a fixed percentage of their assets to agriculture.

“This rule was once in place, and I am today calling for its reinstatement. This aggregated pool of funds could provide the affordable, accessible capital the sector desperately needs,” he said.

Kagwe also backed the creation of a dedicated exchequer-funded agriculture finance facility, modeled after existing structures like the Constituency Development Fund (CDF). 

He revealed plans to recapitalize the Agricultural Finance Corporation (AFC) and merge it with the Commodities Fund, aiming to scale up the institution’s ability to meet capital demands in the sector.

He highlighted innovations such as the Kenya Integrated Agriculture Management Information System (KIAMIS), which has already digitally profiled over 6.4 million farmers.