Kenya breaks new ground with first private Agri securitisation

Kaleidofin has closed Kenya’s first private-sector securitisation focused on agriculture, raising KES 276 million ($2.1 million) to finance smallholder farmers, in a deal that could reshape how rural lending is funded in Africa.

The transaction, done in partnership with Apollo Agriculture and backed by IDH Farmfit Fund, converts thousands of small farm loans into investable assets for institutional investors.

It is the first time in Kenya that private-sector agricultural credit has been packaged and sold in this way, marking a shift from donor-driven or bank-led lending to market-based financing.

The deal securitised farm input loans worth KES 370 million, raising KES 276 million from investors. The portfolio covers 23,839 farmers, more than half of them women, with about 22 percent accessing credit for the first time.

The issuance received a BBB- investment grade rating from Agusto & Co., helping to show that smallholder farm loans can meet institutional investment standards.

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The transaction addresses one of Africa’s biggest financing gaps: how to attract large-scale capital into agriculture, a sector often seen as too risky due to weather shocks, price swings and lack of reliable borrower data.

“This shows that structured finance can unlock capital for farmers at scale,” said Roel Messie, CEO of IDH Investment Management, which manages the Farmfit Fund.

The deal was arranged through Kaleidofin’s ki platform, which uses data and artificial intelligence to assess risk and structure loan portfolios. The system combines credit history, transaction data and alternative data to give investors better visibility into loan performance.

For Apollo Agriculture, the securitisation provides immediate liquidity. By selling its loan receivables, the company frees up cash to issue new loans without increasing its debt.

“This is a meaningful step in building scalable funding for smallholder agriculture,” said Eli Pollak, Apollo Agriculture CEO .

Apollo uses technology such as satellite imagery, machine learning and mobile data to assess farmers who typically lack collateral or formal credit histories. This allows it to lend to rural borrowers who are often excluded from traditional banking.

Experts say local currency financing is a key benefit of the deal. Many African borrowers struggle with foreign exchange risks when loans are denominated in dollars.

By raising funds in Kenyan shillings, the structure reduces currency risk for farmers and lowers repayment pressure.

The transaction is also expected to lower the cost of borrowing. With cheaper funding, lenders can offer more affordable loans, helping farmers invest in seeds, fertiliser and tools to increase yields.

The IDH Farmfit Fund acted as anchor investor and plans to support a broader securitisation programme that could mobilise up to KES 2.37 billion and reach more than 130,000 farmers over time.

Development partners played a key role in making the deal possible. FSD Africa supported legal and regulatory structuring, while the UK’s MOBILIST programme provided tax and market guidance.

Evans Osano of FSD Africa said the transaction helps build the foundations needed to attract institutional capital into sectors often considered high-risk.

“We see this as a blueprint for how structured finance can unlock large-scale funding for inclusive growth,” he said.

The Bill & Melinda Gates Foundation also supported the initiative, focusing on mobilising domestic capital to support women’s economic empowerment.

Meanwhile, British International Investment provided technical support to Apollo Agriculture to strengthen its reporting systems and technology.

The deal could be replicated across Africa, where millions of smallholder farmers lack access to affordable credit.

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Agriculture employs a large share of the continent’s workforce, yet receives only a small portion of total lending due to perceived risks and weak financial infrastructure.

By turning farm loans into tradable assets, securitisation offers a new way to bridge that gap, linking rural borrowers directly to capital markets.

If scaled, such structures could reduce dependence on donor funding and create a more sustainable financing system for agriculture.

For now, Kenya’s first private-sector agri securitisation stands as a test case, one that could determine whether institutional investors are ready to back smallholder farmers at scale.