Characterization of Existing Rural Finance Markets that can Enhance Participation in Climate Smart Agricultural Technologies in Kenya

Purpose: In Kenya, small holder farmers face climate change related challenges. It is therefore imperative to enhance adaptive capacity through climate smart agricultural (CSA) technologies. Access to finance is a significant enabler for adoption of CSA technologies yet small holder farmers, especially women, have an acute financing gap for agriculture. The purpose of the study was to characterize existing rural finance markets that can enhance adoption of Climate smart agricultural technologies among small holder farmers in Kenya and also improve the participation of other agricultural value chain actors in climate smart agricultural technologies. This was to enhance a better understanding of existing rural financial services available to agricultural value chain actors and the potential of the financial institutions to increase credit access to the value chain actors. Methodology: The study used cross sectional data gathered through questionnaires administered on farmers, rural financial institutions and other actors in eight, Kenya Climate Agricultural Project (KCSAP) counties in Kenya. Data was analyzed using Stata statistical package and presented using tables and figures. Findings: Rotating and savings credit associations (ROSCAs) were the main credit source for most households. Findings revealed that farmers rarely access insurance for their farming activities. Unlike farmers, other actors for instance, agro processors and agro dealers get loans through mobile phones where short term loans were borrowed from different providers. Majority of financial institutions were serving agricultural sector. Unique Contribution to Theory, Practice and Policy: The study had presumed that access to rural financial market services by value chain actors in climate smart technologies for crops and livestock will be enhanced and this will increase adoption in the target Counties. The theory or assumption was validated in a workshop by all stakeholders which was followed up by linking up the value chain actors and the financial institutions through capacity building forums. Financial institutions could leverage on existing models used by ROSCAs to increase access to rural financial services especially by women and youth. A gender-transformative approach should be considered to increase women access to rural financial services.