Using Flexible Loans to Improve Access to Credit for Farmers in Kenya

Abstract

Key Messages

• Lenders are designing loan products with flexible terms to respond to the unique needs of farmers in a bid to improve access to credit.
• However, these products are moderately flexible thus are not improving access to credit for farmers as envisaged.
• Lenders should redesign loan products to make them more flexible by providing flexible options such as bullet payments and credit lines.
• Lenders should also educate farmers on full product features to increase their financial literacy in order to improve their agency.
• Government should provide credit guarantee schemes for institutions that lend to farmers to encourage the lenders to design more flexible loan products.