The Agriculture Finance Corporation (AFC) has disclosed that it holds a portfolio of Non-Performing Loans (NPLs) worth Sh. 1.4 billion, accounting for 15.2% of its 9.2 billion loan books.

The state-owned Development Financial Institution (DFI) is responsible for supporting the growth and development of agriculture and related industries by offering loans to farmers and businesses within the sector.

These disclosures, covering the period up to January 7, 2025, come as the institution looks to engage a life insurance company to safeguard itself against losses in case a borrower passes away or becomes disabled.

AFC’s total loan portfolio largely consists of Sh. 8.7 billion worth of loans provided to individuals aged 18 to 69, while Sh. 448.9 million allocated to those aged 70 to 94.

Most NPLs are related to the 18 to 69 age group, totalling Sh. 1.4 billion. In contrast, defaults among those aged 70 to 94 amount to Sh. 43.2 million.

AFC has also revealed that it serves 7,891 clients, with 7,545 customers, having access to loans amounting to Sh. 5 million each.

Approximately 6,709 loan accounts belonged to persons aged 18 to 65, accounting for 8.8 billion of the DFI’s total portfolio of Sh. 9.2 billion.

The fully owned government entity is committed to funding the agricultural value chain to support the growth and development of the sector.

AFC offers loans to farmers, cooperative societies, private companies, public bodies, local authorities, incorporated group representatives and other agricultural stakeholders

They provide managerial, technical, and administrative advice for players involved in agriculture.

The fund charges an interest rate of 10% on a reduced balance, while products like sugarcane under special projects are offered at a rate of 5% on a reduced balance basis.

AFC does not impose a cap on the maximum loan amount and instead assesses the business proposal presented by a client, with their ability to implement it and their repayment capacity.

AFC has previously been accused by the Auditor-General’s office of failing to apply due diligence in disbursement of funds to some farmers, which has put the internal controls and lending framework of AFC in question.

The Agricultural Finance Corporation headquarters are located in Nairobi and has operations in six regions with 47 branches across Kenya.