Farmers abandon Hustler Fund as CBK report shows shift to banks and digital loans

The number of farmers borrowing from the Hustler Fund and microfinance institutions dropped to zero by May, down from March levels, according to a new report by the Central Bank of Kenya (CBK).

The report on the Agriculture Sector Survey notes that 11 per cent of farmers were using the Hustler Fund and 13 per cent relied on microfinance lenders in March, but by May, none of the surveyed farmers reported borrowing from either source.

The CBK survey reveals a sharp shift in borrowing preferences among farmers, with a growing number now turning to commercial banks and digital loan products to finance their agricultural activities.

“The proportion of sampled farmers reporting to have accessed credit for farming remained below 40 per cent. It stood at 34 per cent in May 2025 and 36 per cent in March 2025,” reads the survey.

By May, commercial banks had become the most preferred source of credit among farmers, with borrowing from these institutions rising from 41 per cent in March to 58 per cent in May.

Farmers also increasingly tapped into digital credit platforms such as Fuliza and KCB M-Pesa, whose uptake rose from two per cent in March to eight per cent in May.

Lower lending rates

The shift comes as banks lower lending rates in response to monetary policy easing, making credit more attractive to borrowers in the agricultural sector.

Other sources of credit that gained popularity during the period include buyers of farm produce, whose share rose from 11 per cent to 16 per cent and informal savings and credit groups, which saw an increase from nine per cent to 16 per cent.

However, the proportion of farmers borrowing from savings and credit cooperative societies (saccos) dropped notably, from 35 per cent in March to 24 per cent in May.

“The main sources of credit to farmers are banks, saccos, family and friends, buyers of farm produce, and digital credit providers,” the CBK said, noting that application trends of credit among farmers remained largely unchanged.

The CBK survey indicates that while most farmers still used loans to purchase farm inputs, the percentage dropped from 94 per cent in March to 84 per cent in May. Likewise, the share of farmers using credit to pay for labour declined from 62 per cent to 57 per cent over the same period.

Cautious investment

While uptake for machinery and equipment saw a notable increase, from 25 per cent in March to 41 per cent in May, credit use to expand farmland or diversify production remained low, highlighting a cautious investment approach among farmers.

Access to credit continues to be hampered by structural barriers. The survey found that high interest rates were the leading constraint, with 54 per cent of farmers citing this as a challenge in May, up from 38 per cent in March.

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However, the figure remains slightly below the 58 per cent recorded in November 2024, a drop the CBK attributes to declining lending rates following monetary policy easing.

The percentage of farmers who cited lack of collateral as a constraint remained stable, between 20 and 30 per cent, over the November 2024 to May 2025 period.

Notably, fewer farmers reported having no need for credit.

The share of those not seeking loans fell to 25 per cent in May from 37 per cent in March, though some farmers said they preferred to avoid credit due to the risk of auction in the event of crop failure.

The Hustler Fund, launched as one of President William Ruto’s flagship programmes to offer affordable financing to low-income Kenyans, appears to be losing traction among farmers, raising questions about its long-term impact in the agricultural sector.