Kenyan Government earmarks KSh2.2 billion for youth agribusiness lending through SACCOs

Government Earmarks KSh2.2 Billion for Youth Agribusiness Lending Through SACCOs

The government has earmarked KSh2.2 billion for lending to young people in agriculture under the African Development Bank-supported ENABLE Youth program, with Savings and Credit Cooperative Organizations (SACCOs) expected to play a central role in distributing the funds.

Agriculture Cabinet Secretary Mutahi Kagwe said the financing would be channeled through SACCOs as part of efforts to improve access to affordable credit for young people seeking to establish or expand agricultural businesses.

Speaking during a progress review meeting with the African Development Bank and Ministry of Agriculture officials, Kagwe argued that conventional lending models and high interest rates could make it difficult for farmers and young entrepreneurs to build viable enterprises.

He called for agricultural loans to be offered at single-digit interest rates, saying financing should support businesses with the potential to grow rather than focus solely on disbursing money.

The KSh2.2 billion allocation is part of the next phase of the US$36.3 million ENABLE Youth program, which aims to support youth-led agribusiness and employment.

The financing framework is also expected to involve participating financial institutions, which have committed to mobilizing an additional KSh60 billion for young people and women through risk-sharing arrangements, according to the Ministry's account of the meeting.

The program has also rehabilitated and equipped eight Youth Agripreneurship Incubation Centers, while 1,500 young people have been recruited and enrolled in incubation programs. A further 1,000 have received support to develop business plans, officials said.

Kagwe urged the Ministries of Agriculture and Cooperatives to work with SACCOs to identify viable agricultural enterprises and improve access to credit.

SACCOs have been proposed as a key financing channel because of their existing presence in communities and role in mobilizing savings. However, the effectiveness of the model will depend on the lending terms, eligibility requirements and the ability of young entrepreneurs to access the funds.