ImpactAlpha, February 8 – Most commercial banks in Africa have long dismissed smallholder farmers and other agricultural businesses as too risky. Kenya’s Family Bank offers working capital for farmers to purchase farm inputs and machinery, and operates a small lending program for the country’s tea and dairy farmers.
Impact investment firm Eco.business Fund’s $5 million loan will help Family Bank extend financing to smallholder farmers and agribusinesses for climate-smart technologies and practices.
The new loan to Family Bank follows $10 million in financing in 2022 to support Kenya’s tea farmers. During the pandemic, USAID provided outcomes-based funding to the bank to encourage affordable lending and capacity building to Kenya’s small agri-businesses.
Such partnerships have helped “in widening our capital base and scaling up lending to this sector,” Family Bank’s Nancy Njau said. Lending to agribusinesses, she said, can “bridge their financial need to scale climate-smart agriculture technologies to enhance climate resilience.”