Kenya has completed its first private-sector local currency securitisation in the smallholder agriculture sector, a landmark financial transaction that investors and development financiers say could reshape how capital flows into African farming economies long starved of affordable credit.
Fintech platform Kaleidofin, agri-finance company Apollo Agriculture and the IDH Farmfit Fund announced on Wednesday that the deal had reached a first close of KES 276 million ($2.5 million), creating Kenya’s first securitised agricultural lending structure focused on smallholder farmers. The transaction, backed by UK-supported development agency FSD Africa, signals a potentially transformative moment for African agricultural finance, where millions of farmers remain locked out of formal banking systems despite agriculture contributing more than 30% of Africa’s GDP and employing over half of the continent’s workforce.
The securitisation mobilised capital through receivables originated by Apollo Agriculture, covering a portfolio of 23,839 smallholder farmers across Kenya. More than half of the borrowers are women, while roughly 22% are first-time borrowers entering formal finance systems for the first time. The average loan size stands at KES 17,942. The deal was structured through Kaleidofin’s “ki” platform, a debt capital market infrastructure designed to convert fragmented agricultural loan portfolios into investable assets for institutional investors.
The system uses the company’s proprietary “ki score”, an AI-powered risk intelligence layer built on loan transactions, credit bureau records and alternative data sources. The structure allows agricultural lenders such as Apollo Agriculture to recycle capital more efficiently while giving investors greater transparency into underlying risks, a longstanding barrier preventing large-scale institutional investment into African agriculture.
Unlike traditional agricultural lending models that often depend on donor capital or expensive short-term financing, the securitisation structure creates a mechanism capable of attracting pension funds, institutional investors and private capital into rural lending markets.
The significance of the deal extends well beyond Kenya. Africa faces an estimated agricultural financing gap exceeding $65 billion annually, according to the African Development Bank, with smallholder farmers among the most underserved borrowers globally. Climate volatility, weak collateral systems, fragmented rural markets and limited financial infrastructure have historically made agricultural lending costly and risky.
Supporters of the new structure argue securitisation could begin changing that equation.
“This transaction demonstrates how innovative financial structures can unlock capital for smallholder farmers at scale,” said Roel Messie, CEO of IDH Investment Management, manager of the IDH Farmfit Fund.
“Building investable opportunities in agriculture requires both capital and enabling infrastructure, and this partnership brings those elements together,” he added.
Apollo Agriculture said the transaction would immediately improve liquidity and capital efficiency, enabling the company to expand lending without increasing balance sheet leverage. The company combines farm credit with agricultural inputs, insurance products and advisory services, using machine learning models and satellite data to underwrite borrowers typically excluded from formal banking channels.
“This is a meaningful step in building efficient, scalable funding for smallholder agriculture,” said Eli Pollak, CEO of Apollo Agriculture.“By converting receivables into working capital, we are able to lower our cost of funds and expand access to affordable, local currency financing for farmers,” he added.
The IDH Farmfit Fund acted as anchor investor in the transaction, which forms the first stage of a broader multi-year securitisation programme expected to mobilise approximately KES 2.37 billion and ultimately reach more than 130,000 farmers.
Development finance institutions and policymakers increasingly see local currency financing as critical to stabilising African agricultural investment markets, where foreign currency volatility has frequently undermined rural lending programmes and increased repayment risks for borrowers earning in local currencies.
FSD Africa said the transaction demonstrates how market infrastructure and regulatory support can help unlock institutional capital for sectors historically viewed as too risky. The organisation supported the deal through legal and regulatory structuring assistance, investor engagement and market development work, while the UK government’s MOBILIST programme provided tax and structuring guidance.
“This transaction showcases how well-functioning market infrastructure can catalyse institutional capital for sectors traditionally considered high-risk, like smallholder agriculture,” said Dr Evans Osano, chief financial markets officer at FSD Africa. “FSD Africa’s role has been to help build the foundations from regulatory clarity to investor confidence that make transactions like this viable and repeatable,” he added. “We see this as a blueprint for how structured finance can unlock sustainable, large-scale funding for inclusive growth across Africa.”
The transaction also arrives as African governments and investors intensify efforts to modernise agricultural finance systems amid mounting food security pressures, climate shocks and rising population growth. Kenya’s agricultural sector alone contributes roughly one-third of the country’s GDP and remains central to employment and export earnings. Yet access to affordable credit remains one of the sector’s biggest constraints, particularly for smallholder farmers who produce most of the country’s food supply.
The securitisation model now emerging in Kenya could provide a template for scaling agricultural finance across emerging markets, combining technology-enabled risk assessment, blended finance and institutional capital markets to reach underserved borrowers at scale.
For investors searching for new frontiers in African finance, the deal may signal the beginning of a broader shift where structured finance, artificial intelligence and local currency capital markets converge to transform how Africa funds its rural economy.
