KENYA – Co-operative Bank of Kenya (Co-op Bank), one of Kenya’s leading commercial banks and the primary bank for agricultural cooperative societies in the country, has partnered with eco.business Fund to avail US$10 million financing for on-lending to sustainable agribusinesses.
Being the fund’s first ever investment in Kenya, it aims to provide the much-needed financing for businesses to enhance sustainable measures in their agricultural practices, particularly important in light of the challenging operating environment created by the Covid-19 crisis.
According to the impact investor, the investment contributes to its mission of conserving biodiversity, promoting the sustainable use of natural resources, and mitigating and adapting to climate change.
“We are excited about our fist investment in Kenya: A country rich in biodiversity and opportunities for sustainable development.
“This new partnership with Co-op Bank promises to be a fruitful one as the bank is well positioned to act as an enabler of sustainable production practices,” Dr. Jens Mackensen, Chairperson of the Board of Directors of the eco.business Fund, stated.
Through this partnership, the eco.business Fund and Co-op Bank will provide necessary credit to sustainably certified agribusinesses, such as those in the coffee, tea, and horticulture sectors, Kenya’s main agricultural exports.
“Only by providing tailored financing to the agricultural sector, a key driver of economic activity and sustainable development in Kenya, can we collectively promote green finance with the goal of generating positive environmental and social impact.”Dr. Jens Mackensen – Chairperson of the Board of Directors of the eco.business Fund
The partnership also hopes to finance green measures such as solar and hydroelectric installations for tea factories that reduce reliance on wood as a source of fuel and cold storage solutions that reduce post-harvest losses.
This is expected to boost sustainable production practices and conserve the unique ecological landscape of the country.
“Right from our founding as a bank for agriculture co-operatives, we have always strived to support farmers in their journey to achieve sustainable livelihoods.
“This new partnership with eco.business Fund that makes available USD 10 Million for on-lending to farmers is a winner on many fronts,” said Group Managing Director and CEO of Co-op Bank Dr. Gideon Muriuki.
The lender highlighted that the fund provides financing structured to suit the cycles of agriculture, and also comes with the support mechanisms to assist farmers to make a successful pivot towards sustainable, climate-smart agriculture.
Agriculture is the backbone of the Kenyan economy, employing approximately 75% of the rural population, and making up 34% of the country’s gross domestic product.
However, commercial lending to the agricultural sector remains disproportionally low.
This funding gap limits the ability of producers and processors to invest in sustainable production practices, further compounded by the economic fallout caused by the global pandemic.
“Only by providing tailored financing to the agricultural sector, a key driver of economic activity and sustainable development in Kenya, can we collectively promote green finance with the goal of generating positive environmental and social impact,” said Dr. Mackensen.
The eco.business Fund was initiated by Germany’s KfW Development Bank and Conservation International with financial support from the German Federal Ministry for Economic Cooperation and Development (BMZ).
The Co-operative Bank has landed the partnership aimed to bolster Kenya’s agriculture sector, weeks after Equity Bank received US$144m from the European Union and the European Investment Bank, to provide liquidity to Kenya’s small and medium-sized enterprises (SMEs), including the agriculture sector.
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