Poverty alleviation remains a significant concern in rural Kenya, particularly for small-scale farmers who often face considerable challenges in accessing financial resources. This research examines the impact of micro-finance programmes on poverty reduction among smallholder farmers in Owiro Farm in Nandi County. Employing a mixed-methods approach, the study combines quantitative surveys of 150 small-scale farmers with qualitative in-depth interviews and focus group discussions. Three theories: the asset-based approach; empowerment paradigm; and sustainable livelihood theories were deemed suitable for this research, as they provided a framework for a comprehensive examination of the significance of micro-finance to small-scale farmers. The findings reveal that access to micro-finance significantly enhances agricultural productivity, enabling farmers to invest in essential inputs such as seeds, fertilisers, and equipments. Furthermore, micro-finance is crucial in enhancing financial literacy, equipping farmers with the skills to manage resources effectively, budget for expenses, and diversify income sources. It was established that farmers engaged in micro-finance initiatives have improved their living conditions, with many individuals indicating an ability to invest in their children’s education and healthcare. These improvements are crucial for breaking the cycle of poverty and fostering sustainable community development. However, the research also outlines obstacles that hinder the full realisation of micro-finance programmes. High interest rates associated with certain micro-loans create significant financial pressure, while a lack of financial literacy among some farmers limits their capacity to make informed decisions regarding loan acquisition and management. The study concludes that although microfinance has demonstrated considerable benefits for poverty reduction among smallholder farmers in Owiro farm, there is an urgent need for supportive policies to enhance financial literacy and regulate interest rates to ensure the sustainability of these initiatives. The study contributes to the existing literature on microfinance as a tool for poverty alleviation.