Access to farm inputs is critical in increasing farm productivity.
Current use of agricultural inputs and financial services is low amongst smallholder farmers in Kenya. Small-scale farmers in rural areas of Kenya have not been able to access financial services for acquiring farm inputs among other needs to improve farm productivity.
This is partly due to low density of financial institutions in rural areas; inappropriate financial products; high cost and high risks of lending.
Smallholder farmers adjust by resorting to informal credit, reduction of farm inputs, sub-optimal production techniques, and borrowing from family and friends. This limits the investment in farm equipment and capital as well as other agricultural assets and inputs. As a result, there is need for practical assistance and capacity building to be provided by the private sector. Secondly, financing rainwater harvesting projects through micro-credit organizations that appear to be a sustainable delivery vehicle to enabling communities address the challenges of access to water and sanitation.
In addition, small-scale farmers concentrate on low risk, low return activities because they cannot access start-up capital and cannot transfer system risks.
(via Food security: time to think of the small scale farmers | The Prepaid Economy Blog)