IMPACT FINANCING STRATEGIES AND THE SUSTAINABLE GROWTH OF THE AGRICULTURAL BUSINESS SECTOR IN KENYA
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Date
2025-09
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Publisher
THE CATHOLIC UNIVERSITY OF EASTERN AFRICA
Abstract
The agricultural sector in Kenya plays a pivotal role in the country’s economy, contributing 30% to the Gross Domestic Product (GDP). Despite its great potential many agribusinesses struggle to obtain credit or investments due to lack of collateral, high interest rates and limited financial infrastructure. Various financial interventions by the government, commercial banks and microfinance institutions have not yielded substantial contribution. The agricultural sector value chain remains largely fragmented which reduces efficiency and hindering growth of the agricultural stakeholders while small-scale producers are often excluded from structured value chains due to scale and quality issues. This study focused on sustainable growth of the agricultural business sector as the dependent variable while the independent variables are capital raising strategies, social value strategies, environmental value strategy and financial literacy strategies. Finally, the last objective was to evaluate the mediating role of risk attitude on the relationship between these strategies and the growth of the agricultural business sector in Kenya using quantitative research method approach. The study was mainly anchored on resource-based theory (RBV), social entrepreneurship theory and financial intermediation theory. Primary data was collected through questionnaires. Furthermore, this research sought to establish the structural relationship between agricultural impact financing strategies and the sustainable growth of the agricultural business sector in Kenya using the Structural equation model (SEM). The study found out that capital raising strategies played a significant role in both risk attitudes and sustainable agriculture. Social value strategies did not significantly influence risk attitudes but had a statistically significant negative effect on sustainable agriculture. Financial literacy strategies were not found to significantly influence sustainable agriculture. Environmental value strategies were positively and significantly associated with risk attitudes and sustainable agricultural. Risk attitudes had a significant and negative effect on sustainable agriculture. The study established that by improving access to capital, enhancing financial literacy, improving social and environmental values and addressing risk related barriers are key to advancing sustainable agriculture in Kenya’s agribusiness sector. The findings of this study shall benefit policy makers to make appropriate policies to improve access to capital, improve financial literacy while addressing the social and environmental factor to spur agricultural business sector growth.
Description
Dissertation
Keywords
Impact financing strategies, sustainable growth, agricultural finance, financial inclusion, agribusiness development.