Kenya is turning to the private sector to fund nearly half of an ambitious KSh1.08 trillion ($8.3 billion) agricultural overhaul, a five-year investment plan aimed at lifting growth in a crucial industry that has long underperformed its targets. The state-backed National Agri-Food Systems Investment Plan, or NASIP, covers the years 2026 through 2030.

Unveiled Tuesday at a financial summit in Nairobi, the program relies heavily on outside capital. The national and county governments will cover 35 percent of the cost, or KSh378.35 billion ($2.92 billion), while private investors are expected to bring in 45 percent, or KSh486.45 billion ($3.76 billion). Development banks and bilateral partners will fill the remaining 20 percent.

Agriculture is the backbone of Kenya’s economy, accounting for 22 percent of gross domestic product and employing 60 percent of the rural workforce. Yet between 2019 and 2024, the sector grew at an average annual pace of just 2.7 percent, less than half of the government’s 6 percent target. Local farming suffers from structural deficits: less than 5 percent of arable land is irrigated, maize yields lag global averages, and up to 40 percent of food is lost after harvest.

To reverse these trends, officials plan to deploy the capital gradually, starting with 20 percent in the first year, 25 percent in each of the next two years, and the final 30 percent sp lit across the last two years. Irrigation and mechanization will take the largest slice of the budget, with KSh175 billion ($1.35 billion) earmarked for public-private partnerships.

Blended finance unlocks smallholder farmer credit

The money is meant to put an additional 150,000 to 200,000 hectares under irrigation, with the goal of increasing crop yields by up to 50 percent. Another KSh148 billion ($1.14 billion) will back a blended finance facility. This vehicle aims to protect commercial lenders by guaranteeing up to half of their loans, a move designed to unlock credit for 2.5 million smallholder farmers.

The strategy also attempts to curb Kenya’s dependency on food imports, specifically its edible oil bill, which costs the country between KSh99 billion ($766 million) and KSh102 billion ($788.8 million) every year. By allocating KSh120 billion ($928 million) to agro-industrialization and building processing zones across six economic corridors, the state aims to slash those imports by half and boost agricultural export values by 30 percent.

Additionally, the government will phase out its universal fertilizer subsidy. In its place, a KSh51 billion digital e-voucher system will target 1.2 million to 1.6 million vulnerable farmers, pastoralists, and fisherfolk to help them buy seeds, animal health services, and insurance.

Remaining funds are split among related priorities. Climate resilience and farm insurance will receive KSh85 billion, while KSh90 billion will fund 500 farmer enterprise clusters and a digital identification system. Food safety systems are budgeted at KSh55 billion, agricultural research and data infrastructure will get KSh45 billion, and KSh30 billion is set aside to support local county extension services.

New plan eyes boosted agricultural growth

Officials expect the total package to push annual agricultural growth to between 6 percent and 7 percent. Economists behind the plan say it carries a 1.9-to-one benefit-cost ratio, and estimate portfolio returns will fall between 12 percent and 19 percent. Government planners also expect the state’s risk-sharing tools to draw in an additional KSh500 billion ($3.86 billion) in private capital beyond the core investment target.

Even with heavy private backing, the plan faces an immediate budget gap of KSh250 billion ($1.93 billion) to KSh300 billion ($2.31 billion). Planners blame the shortfall on conservative public spending projections and unconfirmed donor pledges, noting that irrigation and climate infrastructure projects remain underfunded. To close this gap, officials say they are considering a KSh100 billion ($773.4 million) green bond, expanding state loan guarantees, and using land-for-equity partnerships.

The program will run on a three-tier governance system. A national steering committee led by the Agriculture Ministry’s principal secretary will manage the top-line strategy, while county committees handle local projects. To ensure accountability, county funding will be tied strictly to performance; any local administration that falls below 80 percent of its targets risks having its funding reallocated to other regions.