Scaling digital financial services for smallholder farmers in Kenya: A stakeholder consultation on challenges, opportunities, and action pathways
Smallholder farmers and small- and medium-sized agricultural enterprises (SMEs) account for around 80% of Africa’s food production, yet they face an estimated $75 billion annual gap in financing the seeds, fertilizer, tools, and services needed to make them consistently productive and resilient.
- insurance
- risk
- resilience
By Berber Kramer, Esther Nzuki, Julie Ghostlaw, and Shalika VyasJuly 23, 2026
Key takeaways
- The new Tool for Agricultural Risk Assessment (TARA) helps expand access to credit and insurance in Kenya. The AI-based platform aids financial institutions in better assessing risk and serving smallholder farmers.
- A recent workshop focused on efforts to scale TARA. Partners aim to reach 50,000 farmers by 2028. The initiative sets strong inclusion targets for women, youth, and marginalized groups.
- Scaling will require coordinated action. Stakeholders prioritized credit guarantees, farmer awareness, financial literacy, and stronger partnerships.
Smallholder farmers and small- and medium-sized agricultural enterprises (SMEs) account for around 80% of Africa’s food production, yet they face an estimated $75 billion annual gap in financing the seeds, fertilizer, tools, and services needed to make them consistently productive and resilient. While agriculture employs over 60% of Africa’s workforce and contributes between 20% and 40% of GDP, commercial banks still channel less than 6% of their lending to the sector.
A major challenge for banks’ lending to farmers is weather risk: in Kenya, climate variability reduces commercial banks’ financial stability due to non-performance of agricultural loans. Insurance companies also struggle to assess an individual farmer’s risk or efforts to prevent damage. This has made insurance companies reluctant to offer comprehensive coverage to smallholder farmers. As a result, only 2% of African farmers have access to agricultural insurance, compared with 20% in the rest of the world.
To address these issues, IFPRI and ACRE Africa developed a picture-based insurance solution that uses smartphone photos to assess crop damage when the insurance index fails to trigger a payout. When offered such insurance, uptake increased by nearly 20 percentage points, with the largest effects among women farmers and farmers in semi-arid areas.