(NAIROBI, KENYA) – Kenyan banks will expand lending to green enterprises under a five year partnership between the Global Green Growth Institute and the Kenya Bankers Association signed in Nairobi.
The two institutions signed a Memorandum of Understanding to strengthen sustainable finance, promote green investment and mobilise public and private capital for sustainable development.
The partnership targets challenges that have limited access to finance for green enterprises, particularly small and medium enterprises. It will help businesses develop bankable projects while enabling financial institutions to better assess and finance sustainable investments.
GGGI Manager for Africa Strategy and Partnerships and Head of Kenya Office Nagnouma Kone said the agreement would help close the gap between entrepreneurs seeking financing and banks looking for investment ready projects.
Kone said entrepreneurs have long complained that banks are not lending while banks have said there are not enough bankable green projects. She said the partnership is about closing that gap.
The collaboration will focus on de risking green lending, improving understanding of nature positive investments and helping businesses meet bankability requirements.
The partners will also explore financing instruments including sustainability linked bonds and green loans to channel more capital towards sustainable and biodiversity positive investments.
KBA Chief Executive Officer Raimond Molenje said the banking industry had a critical role in financing Kenya’s sustainable development ambitions. He said the partnership would strengthen market readiness, build institutional capacity and support practical financing solutions capable of unlocking investment in green growth opportunities.
Under the agreement GGGI and KBA will work on sustainable finance policies and market practices, promote green investment, build the capacity of financial institutions and support the development of bankable investment opportunities.
The partnership will also facilitate technical assistance, training, research, knowledge sharing and investment facilitation as Kenya seeks to transition to a resilient, low carbon and inclusive economy.
The MoU was signed during the launch of the International Climate Initiative funded SYMBIOTIC Project. The project will support biodiversity planning, financing, private sector investment and restoration.
Kenya’s banking sector has shown growing interest in sustainable finance with several lenders introducing green loan products and sustainability linked facilities in recent years. The market for green bonds in Kenya has also expanded since the first corporate green bond was issued in 2019.
The Central Bank of Kenya has issued guidance on climate related risk management for banks. Regulators have encouraged lenders to integrate environmental and social considerations into their lending decisions.
Small and medium enterprises account for a large share of Kenya’s economy but often struggle to access affordable credit. Green businesses face additional hurdles because banks may lack the technical capacity to evaluate environmental projects.
The GGGI partnership aims to address these capacity gaps through training and technical assistance. The institute has worked in Kenya on green growth planning, climate finance and sustainable energy projects.
The SYMBIOTIC Project funded by Germany’s International Climate Initiative will provide additional resources for biodiversity focused work. Kenya has committed to restoring degraded landscapes and protecting its natural capital under national and international environmental agreements.