Banks offer borehole loans to farmers 

By Frank Odindo

Banks in Kenya are offering up to 100% finance to farmers to drill and equip their own boreholes, fundinginvestments that can triple a farm’s earnings by slashing the losses from erratic rainfall and adding a third season.

With the cost of drilling a borehole running at Sh1m to Sh3m, which few farmers can afford out of pocket, FarmBizAfrica talked to banks and SACCOs to establish the best financing options, and gives their full details here:

1. Co-operative Bank – CO-OP-A-MAJI Loan

Co-operative bank is among the top five banks in Kenya. It offers a loan designed to help farmers improve their productivity. The credit facility is called  CO-OP-A-MAJI loan. 

Product Overview:

• It is available for individuals, MSMEs and institutions.
• Designed for Water, Sanitation & Hygiene (WASH) projects, including boreholes.
• Other projects that can be financed by this loan include smart meter, solar water pumps, solar heating systems and installation, water bowsers or  exhausters, water tanks, water purification systems, household  and office water connection. 
• Offers flexible repayment terms tailored to farming cycles.

Key Features:

• The bank offers 100% financing.
• Its available to both Co-operative bank customers and non-customers.
• Competitive interest rates (varies per customer profile).
• Can cover drilling, pumps, and storage tanks.
• Available to both individual farmers and farmer groups.

Requirements:

• An account with Co-op Bank (or willingness to open one) to get an unsecured loan.
• Non-customers need to provide 12 months bank statements and security
• Proof of land ownership or lease agreement.
• Business permit or license
• For loan amounts above Sh5m, audited books of accounts
• Project quotation from an approved technician
• Feasibility report (in some cases).

How to Apply:
Visit co-opbank.co.ke or any branch for consultation.

2. KCB Group 

KCB Bank Group is Kenya’s leading bank in terms of assets, with a capital base in excess of Sh1.4 trillion. For boreholes, KCB offers a Farm Asset Loan as one of its agri-business loans .

Product Overview:

This loan facility enables customers to purchase commercial and farm machinery and equipment such as green houses, irrigation kits, oil processing equipment, chaff cutters, tractor implements, trucks for transport produce e.g. cereals, milk etc.

Key Features:

• Loan amounts vary based on project scope.
• Flexible repayment schedules are aligned with harvest seasons.

Requirements:

• Must have a farming business with verifiable income for at least one year.
• Active KCB account holders for three months. Non-KCB account holders need to provide 6 months’ bank statements. 
• Collateral may be required (land title, machinery, or guarantors).

How to Apply:
Check ke.kcbgroup.com for details or visit a KCB branch.

3. Equity Bank – Agricultural Loan

Equity Bank is the second largest bank, after KCB, in terms of capital base, with some Sh1.004 trillion. Equity Bank also said that they offered loans to support farmers who wanted to expand or improve their farming operations. A branch visit is required with your original ID to talk with the bank’s credit team for review on eligibility and application. 

Product Overview:

• Their product suited for a borehole is called the Commercial Agriculture Loan. It is available to medium and large-scale farmers 
• Provides financing for farm improvements, including borehole drilling.

Key Features:

• Customised loan packages based on farm size and needs.
• Repayment period may extend to ten years.
• Quick approval process for existing customers.

Requirements:

• National ID and proof of farming activity for more than a year.
• Demonstrate ability to repay the loan and other sources of income in case of crop failure due to adverse weather or other factors.
• Must visit a branch for credit assessment.
• Some cases require security (land or assets).

How to Apply:
Contact Equity Bank via their website or visit a branch.

Alternative Financing Options

4. SACCOs & Microfinance Institutions

• SACCOs (e.g., Mhasibu, Unaitas) offer lower-interest loans for boreholes. However, you must be an active member of the respective sacco, and be depositing with them to enjoy any loan facility. At the same time,  with saccos, you get a multiple of your deposit. For instance, Stima sacco says that you get 4x of your deposit. The amount on top of your deposit is secured by the collateral that you will provide. 

Before applying for a borehole loan

1. Cost Assessment
   • Get quotes from licensed drillers to determine the exact budget.
   • Factor in additional costs (pumps, piping, and storage tanks).
2. Loan Terms Comparison
   • Compare interest rates, repayment periods, and hidden fees.
   • Some banks offer grace periods until the first harvest.
3. Feasibility & Sustainability
   • Conduct a hydrogeological survey to confirm water availability.
   • Ensure the borehole will generate enough returns to repay the loan.
4. Legal & Environmental Compliance
   • Obtain a Water Resource Authority (WRA) permit for borehole drilling.
   • Follow NEMA guidelines to avoid fines.

Additional resources 

• Water Resources Authority (WRA) – Borehole Permits
• Ministry of Agriculture – Irrigation Support Programs

This article was written for Farmbiz Africa to help farmers make informed financial decisions. For more agricultural insights, follow our updates!