Agricultural Finance Corporation banks on wholesale model to bridge $100bn finance gap

More than 1,000 policymakers, financiers and industry leaders opened the Financing Agri-Food Systems Sustainably (FINAS) 2026 Summit on Tuesday morning at the Kenyatta International Convention Centre, with Kenya's Agricultural Finance Corporation featuring prominently as a potential blueprint for agricultural financial inclusion across the continent. The three-day conference, convened under the theme "Towards Sustainable Financial Architecture for Africa's Food Systems," brings together government officials, development partners, financial institutions and private sector actors to confront an estimated $100 billion annual financing gap in agriculture. Less than five per cent of commercial credit reaches s mallholder farmers , youth-led agribusinesses and women entrepreneurs who produce up to 80 per cent of the continent's food. The Agricultural Finance Corporation, a state-owned development finance institution established to provide sustainable credit to Kenya's agricultural sector, has transformed its operations through a wholesale lending model developed in partnership with the Alliance for a Green Revolution in Africa (AGRA). Under the model, AFC extends bulk credit facilities to anchor institutions including SACCOs, cooperatives, microfinance institutions and structured off-takers, which then on-lend to their members. Many of these smallholder farmers lack traditional collateral such as titled land or fixed assets. The model replaces rigid requirements with social collateral and group-based guarantees, utilising cooperatives' localised appraisal systems to onboard previously "unbankable" rural entrepreneurs. The approach has scaled rapidly. AFC's client base jumped from roughly 119,000 to 213,000 borrowers. Loan disbursements for the financial year ended June 2025 reached Sh4.7 billion, up from Sh8 billion in April 2021. AFC lends at a fixed 10 per cent interest rate. Non-performing loans have eased to 16 per cent from a peak of 31 per cent in June 2022. The wholesale structure addresses two persistent failures in agricultural lending. First, it lowers transaction costs; lending to a cooperative serving thousands of members costs significantly less than administering thousands of individual loans. Second, it transfers borrower appraisal and monitoring to institutions with on-the-ground presence and local knowledge. "Due to the inherent risks and uncertainties of agriculture, many financial institutions avoid lending to this sector, resulting in financial exclusion, particularly for youth, women, and rural populations," AFC Managing Director George Kubai has said. The model has attracted development partners and government programmes, including the Rural Kenya Financial Inclusion Facility Project (RK-FINFA), which channels concessional resources through AFC's intermediary capacity. The Government has allocated Sh5 billion to strengthen the livestock value chain through wholesale lending. Beyond wholesale lending, AFC has developed Warehouse Receipt Financing , allowing farmers to use stored produce as collateral, alongside Asset Financing and Structured Value Chain Financing. In late 2025, AFC became the first Kenyan institution to attain Sustainability Standards and Certification Initiative certification from the European Organisation for Sustainable Development. The question confronting summit participants is whether this approach translates beyond Kenya's borders. Agriculture financing gaps across Africa share common characteristics: risk-averse commercial banks, fragmented smallholder populations and weak collateral frameworks. Stay informed. Subscribe to our newsletter