Kenya’s government has established an ambitious objective to secure Ksh100 billion via green and climate bonds by 2027, forming part of a comprehensive strategy to reform how the nation invests in and expands its agricultural industry.
A document reviewed by indicates that the National Treasury will offer bonds with interest rates below market levels, ranging from 4 to 6 percent, featuring maturity periods of 5 to 10 years, supported by revenue from carbon credits.
Solar-powered cold storage facilities and regenerative farming initiatives are among the designated projects receiving funding, all connected to Kenya’s National Climate Change Action Plan, with the purpose of enhancing the resilience of the nation’s food production systems.
“The National Treasury will issue these bonds for sustainable initiatives such as solar-powered cold chains and regenerative farming. The bonds have maturities of 5-10 years, interest rates below market levels (4-6%), and are backed by revenues from carbon credits,” part of the document stated.
These bonds constitute a component of the National Agriculture Sector Investment Plan (NASIP), a structure that combines public, concessional, and private funding to minimize investment risks and expand high-impact agricultural projects.
NASIP’s broader objective is to secure at least 45 percent of its financing from private sources by 2030, steering Kenya toward a model where
In spite of this bold objective, the document points out that a persistent obstacle to its realization is the perception among lenders that agriculture poses excessive risk, an issue the government is now tackling directly through credit guarantees administered by the Agriculture Finance Corporation.
To facilitate the bond issuance, the Agricultural Finance Corporation (AFC) – Kenya’s primary fully government-owned Development Finance Institution (DFI), collaborating with the African Development Bank and International Fund for Agricultural Development (IFAD), will cover up to 50 percent of loan risks, aiming for a total of between Ksh100 billion and Ksh150 billion in guaranteed loans over a five-year period.
Notably, women and youth represent a central focus of this plan, with a minimum of 40 percent of all loan guarantees allocated to enterprises led by women and young individuals, consistent with NASIP’s inclusivity objectives.
Quarterly monitoring of repayment rates will be conducted, maintaining a requirement above 85 percent to ensure the guarantee program remains financially viable and continues to serve additional borrowers without becoming a financial burden on public resources.
Climate funding sources, including the Green Climate Fund (GCF), the Adaptation Fund, and bilateral collaborators such as the European Union (EU) and Japan International Cooperation Agency (JICA), will distribute Ksh50 billion yearly in low-interest loans at rates ranging from 2 to 4 percent.
Counties will not be excluded from this plan, as the County Agricultural Investment Fund (CAIF) will provide agri-tech startups with initial capital ranging from Ksh10 million to Ksh50 million per venture, targeting expected investor returns of 15 to 20 percent through exit mechanisms like Initial Public Offerings (IPOs).
This same fund establishes a 10-15 percent reserve to counteract financial volatility and protect farmers from uncertainty, particularly during challenging weather conditions.
Kenyan farmers have historically encountered significant credit limitations, with fewer than 10 percent of small-scale farmers obtaining formal bank loans, and ongoing payment delays from governmental entities. These obstacles persist across the nation.