Young farmer./FILE Experts say climate-smart technologies and flexible financing could help young people tap into agriculture while reducing the country’s dependence on food imports.
Kenya’s persistent shortages of key food products such as eggs, milk, fish and honey could become a major source of jobs and income for young people if financing systems are redesigned to support agriculture and climate-smart technologies, a new report has found.
The Food Systems Analysis commissioned by FSD Kenya through the Green Finance for Youth Employment (GFYE) project shows that while demand for food products continues to rise, many young people are unable to invest in agribusiness due to limited access to credit, lack of collateral and inadequate technical support.
The study examined five agricultural value chains across 14 counties, including dairy, horticulture, poultry, fisheries and aquaculture, and apiculture, which are considered critical for food security and employment creation.
According to the report, Kenya currently faces an annual deficit of five billion eggs, between 6.5 and 7.5 billion litres of milk, 340,000 metric tonnes of fish and 5,500 metric tonnes of honey. The shortages are largely met through imports, creating untapped opportunities for local youth-led enterprises.
Agriculture remains one of Kenya’s most important economic sectors, contributing about 22.4 per cent directly to the country’s Gross Domestic Product and employing more than 40 per cent of the population, according to government data.
However, the report found that existing financial systems are poorly aligned with the realities of farming and agribusiness.
The analysis, based on data from 1,210 agri-enterprises, 88 key informant interviews and 28 focus group discussions, revealed that 53 per cent of agri-enterprises cited lack of collateral as the main barrier to accessing credit. Another 43 per cent pointed to irregular income, while 16 per cent cited weak financial records.
The researchers noted that most financial institutions still offer rigid loan repayment schedules with limited grace periods, making them unsuitable for farming activities that rely on seasonal cash flows.
The study also found that lenders rarely use alternative data such as mobile money transactions, cooperative delivery records and digital platform histories to assess borrowers, effectively locking out many viable youth enterprises.
At the same time, the report identified green technologies as a major opportunity for improving productivity and profitability in agriculture.
“In poultry farming, for instance, replacing conventional feed with black soldier fly protein and using solar-powered heating instead of grid electricity reduced monthly production costs by 42 per cent and increased returns on investment from 108 per cent to 260 per cent over a 16-month production cycle,” the report stated.
In addition, demand for technologies such as solar-powered cold storage facilities, irrigation systems, solar incubators and modern beehives is also growing across value chains.
Mariatu Kamara, Country Director and Representative of the International Fund for Agricultural Development (IFAD) in Kenya, said young people are central to transforming Africa’s food systems and rural economies.
“Across Africa, there is growing recognition that young people are central to the transformation of our food systems and rural economies. Under IFAD14, we are deepening our focus on creating opportunities for young people through climate-resilient investments and support to the first mile of food systems,” she said.
Kamara said the main challenge facing youth participation in agriculture is not lack of policies, but limited implementation and low confidence among financial institutions to lend to young farmers.
“The problem is really not about formulating policies. The issue is implementing the policies that are already there and giving financial institutions the confidence to provide loans to young people,” she said.
She revealed that IFAD has invested close to Sh64.5 billion ($500 million) in Kenya, with youth participation being a key focus across all projects.
She said under its rural finance programmes, IFAD is working with the Agricultural Finance Corporation (AFC), SACCOs and banks to provide de-risking facilities and guarantee funds aimed at encouraging lending to young farmers.
Kamara also said agricultural loans should be structured around farming cycles.
“You cannot provide a loan to a poultry farmer and expect repayment the following month. The loans must be structured around the realities of agriculture,” she said.
She warned that agriculture in Kenya is still largely viewed as a retirement activity, yet the average age of farmers is estimated at about 60 years.
“We need to make agriculture attractive and profitable for young people. Agriculture should not be seen as a retirement job, but as a commercial activity capable of moving people out of poverty,” she said.
FSD Kenya Chief Executive Officer Rashmi Pillai said close to 800,000 young people enter Kenya’s job market every year, yet less than half are interested in agriculture or agri-related businesses.
“Kenya’s food deficits are not only a food-security challenge; they are a youth-employment opportunity, and green finance is the bridge between the two,” Pillai said.
She said climate change is reshaping agricultural financing needs and called for increased investment in climate-smart technologies and innovative financing models such as lease-to-own and pay-as-you-go systems.
The report recommended restructuring agricultural financing to align with seasonal cash flows, expanding credit access through alternative data instead of traditional collateral requirements, and strengthening market linkages through structured offtake agreements.
Researchers say coordinated investment from policymakers, financial institutions and private sector players will be critical in creating decent jobs for young people while strengthening Kenya’s food systems.
