By Ted Apondi
Kenya’s arid and semi-arid lands (ASALs), which constitute about 80% of the country, are most affected by climate change. These regions face significant challenges, including erratic rainfall patterns, frequent droughts, and widespread soil degradation. Millions of people living in these areas rely on agriculture as their primary source of income and sustenance. With agriculture contributing approximately 33% of Kenya’s GDP and employing over 40% of the population, it’s evident that this sector plays a crucial role in the nation’s development. However, the increasing effects of climate change pose serious risks to food security, rural incomes, and environmental sustainability.
Climate-smart agriculture (CSA) has emerged as a viable solution to these challenges. CSA promotes agricultural practices and technologies to enhance productivity, improve resilience to climate-related shocks, and lower greenhouse gas emissions. In ASALs like Machakos County, CSA methods such as water-efficient irrigation, agroforestry, and drought-resistant crop varieties have shown great promise. Yet, the widespread adoption of CSA remains limited, mainly due to fragmented funding, restricted access to credit, and a lack of coordinated efforts across projects. To realize CSA’s full potential, Kenya needs stronger financial investments, better collaboration among stakeholders, and a more integrated approach to its implementation.
One initiative that is making strides in advancing CSA is the Kenya Climate Smart Agriculture Project (KCSAP). Funded by the World Bank, this project operates in 24 counties and promotes CSA technologies such as improved seed varieties and water conservation systems like sand dams and Zai pits. In Machakos County, these interventions have significantly boosted water availability and enhanced agricultural productivity, enabling farmers to adapt better to climate variability with key implementations of Zai pits in Mwala constituency and a green gram value addition program in Yatta Sub County. Despite these successes, many CSA initiatives remain isolated, with limited collaboration between counties, sectors, and neighboring communities. This lack of integration hinders shared learning, resource optimization, and scalability—key principles emphasized by the UN Sustainable Development Goals (SDGs), which advocate for cross-sectoral cooperation to tackle interconnected challenges.
Financial institutions are particularly critical in addressing the funding gaps for CSA. Organizations like the Agricultural Finance Corporation (AFC), a government entity, have significantly contributed by offering low-interest loans for climate-resilient technologies, such as solar-powered irrigation and agroforestry projects. These efforts help bridge the financial gap for smallholder farmers, empowering them to adopt innovative CSA practices. Additionally, the AFC provides financial literacy training to farmers, enabling them to manage credit effectively and navigate funding complexities.
Private banks and microfinance institutions are also stepping up, introducing sustainable finance solutions incorporating Environmental, Social, and Governance (ESG) principles. For instance, Equity Bank and KCB offer products tailored to agriculture, including weather-indexed insurance and input financing for CSA technologies. Weather-indexed insurance programs like “Kilimo Salama” protect farmers against losses from climate shocks, reducing financial risks tied to new agricultural practices. Furthermore, these financial institutions collaborate with donor organizations and the Kenyan government to expand CSA financing, using public-private partnerships (PPPs) to draw more agricultural investment.
Despite these advancements, CSA financing in Kenya faces persistent hurdles. Public funding often falls short or is poorly allocated, while donor contributions are frequently short-term and lack sustained focus. Meanwhile, private sector actors prioritize profitability, sidelining smallholder farmers who lack collateral or credit histories. The lack of coordination among various stakeholders also leads to fragmented efforts, undermining the potential for unified, large-scale impact. Sustainable finance therefore offers a promising pathway to overcoming these challenges. By incorporating ESG principles, sustainable finance directs resources toward economically viable, environmentally sound, and socially inclusive initiatives. Blended finance models, green bonds, and community-based financial systems are some tools explored in this space. For instance, blended finance, which combines public, private, and donor funds, has successfully reduced risks and attracted private investment. The Green Climate Fund (GCF) has shown how such approaches can support climate resilience projects by sharing risks with private investors. Similarly, green bonds, while underutilized in agriculture, have the potential to scale CSA efforts, building on Kenya’s success with these instruments in the renewable energy sector.
To scale up CSA financing, organizations like the AFC must lead by developing innovative products tailored to the needs of smallholder farmers, such as low-interest loans for water-saving technologies or grants for sustainable land management practices. Maximizing capacity-building initiatives, including financial literacy training, is also essential to ensure farmers can make the most of available credit options. At the same time, international donors need to align their investments with local priorities, shifting from short-term interventions to sustained, long-term partnerships.
Machakos County provides valuable insights into how CSA can be scaled across Kenya’s ASALs. Community-based initiatives like savings and loan cooperatives have proven effective in offering localized, accessible financing for farmers. Integrating these informal systems with formal financial structures could improve their reach and efficiency. Additionally, digital tools could enhance transparency, collaboration, and real-time monitoring of CSA projects. For example, data-sharing platforms could ensure resources are allocated to the areas where they are needed most. Policy and governance reforms are equally important. Counties should adopt more horizontal approaches to CSA implementation, encouraging collaboration and resource-sharing across regions. Public-private partnerships should be incentivized with tax breaks and guarantees to attract investment while ensuring inclusivity for marginalized farmers. Strengthened monitoring and evaluation systems could provide data-driven insights to measure the impact of CSA initiatives and inform future decisions.
Ultimately, unlocking the potential of CSA in Kenya’s ASALs requires a paradigm shift in how agricultural development is financed and executed. Kenya can lead climate-resilient agriculture by fostering stakeholder collaboration, integrating sustainable finance, and addressing systemic barriers. Initiatives like KCSAP and the AFC highlight how strategic financial and policy interventions can create a significant impact. With the right frameworks in place, Climate Smart Agriculture has the potential to improve agricultural productivity, enhance climate resilience, and secure livelihoods, paving the way for a more sustainable and equitable future.
Bio
Ted Apondi is a master’s candidate in International Relations at the United States International University – Africa. His research focuses on climate adaptation and sustainable development, particularly financing Climate-Smart Agriculture (CSA) in semi-arid regions like Machakos County, Kenya. Ted is dedicated to exploring innovative financial mechanisms and policy interventions that foster agricultural resilience and food security amidst the challenges of climate change.