Let's make farming sustainable through innovative funding

Lucy Makena Instefast system technician showcasing a dam liner that has been used to make the vertical garden at a demo farm in Nyeri. [Purity Mwangi, Standard]

Accounting for nearly 33 per cent of the country’s GDP and employing over 70 per cent of the population, Kenya’s agricultural sector, stands at a crossroads.

To unlock the full potential of the sector and position the country as a leader in sustainable development; strategic investments in technology, sustainable practices, and innovative funding models are imperative.

Despite providing livelihoods to millions and contributing significantly to food security, the sector faces numerous challenges. Climate change, land degradation, low productivity, and limited access to markets and finance and a declining youth interest in farming are just a few of the hurdles that must be overcome.

Sustainable agricultural practices are essential. Investments in organic farming, agroforestry, and water conservation can help protect the environment, reduce reliance on harmful chemicals, and improve soil health. Moreover, promoting climate-smart agricultural practices such as regenerative agriculture, can enhance resilience to climate change impacts, ensuring food security in the face of increasing droughts and floods.

Notably, technological innovation has become a game-changer in modern agriculture. Precision agriculture, for example, powered by advanced technologies such as drones, satellite imagery, and data analytics, offers unprecedented opportunities to optimise resource use, enhance productivity, and reduce environmental impact.

According to recent studies, farms utilising precision agriculture techniques have reported yield increases of up to 15 - 20 per cent, coupled with a significant reduction in input costs. In Kenya, use of drones for crop monitoring, pest control, and precision irrigation is already showing promising results. Subsequently, use of mobile-based advisory services has led to a 15 per cent increase in maize yields and a 10 per cent reduction in input costs.

However, the adoption of these varied technologies remains limited, especially among smallholder farmers who form the backbone of Kenya’s agriculture. To bridge this gap, public-private partnerships must be strengthened to subsidise cost of technology and provide training to farmers. Organisations such as Food and Agriculture Organisation (FAO), Technoserve and AGRA; are working to bridge these gaps by promoting technology adoption and farmer training through their platforms, programmes and partnerships.

To attract investment into Kenya’s agricultural sector we require innovative funding models that align financial returns with social and environmental impact. Impact investing, which focuses on generating measurable positive outcomes alongside financial returns, is one such model that can mobilise private capital for agricultural development. The global impact investment market is estimated at over $1 trillion, and tapping into this growing pool of capital could significantly bolster our agricultural sector.

Despite progress in expanding access to financial services, only about 10 per cent of Kenyan smallholder farmers have access to formal credit. This limits their ability to invest in productivity-enhancing inputs, equipment, and technology.

Expanding digital financial services, including mobile money platforms, can bridge this gap, enabling farmers to access credit, insurance, and savings products tailored to their needs.

The writer is an investment expert