The eco.business Fund has made its first investment in Kenya offering Co-operative Bank of Kenya (Co-op Bank), Kshs 1.1 billion shillings for onward lending to sustainable agribusinesses that promote sustainable use of natural resources, and help in mitigating effects of climate change.
Co-op Bank CEO Gideon Muriuki says the new funding provides financing that is structured to suit the financing cycles of agriculture, which employs 75% of the rural population.
Muriuki says the investment will provide 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.
Commenting on the sign-off of the partnership, Muriuki said: “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; it provides financing that is structured to suit the financing 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.
The investment aims to provide financial resources to those that need it most, while simultaneously promoting conservation finance as mainstream.
Co-op Bank is the third largest commercial bank in Kenya, and the primary bank for agricultural cooperative societies.
Through the new investment, the eco.business Fund and Co-op Bank are seeking to provide necessary credit to sustainably certified agribusinesses, such as those in the coffee, tea, and horticulture sectors, Kenya’s main agricultural exports.
By financing green measures such as solar and hydroelectric installations for tea factories that reduce reliance on fuelwood, and cold storage solutions that reduce post-harvest losses, the partners hope to boost sustainable production practices and conserve the unique ecological landscape of the country.
Dr. Jens Mackensen, Chairperson of the Board of Directors of the eco.business Fund, stated: “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. 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.”