African Development Bank Group (AfDB) and KCB Bank Kenya Limited have signed a $150 million financing package to expand green finance, accelerate climate-smart investment and strengthen trade finance capacity in Kenya’s SME and corporate banking sectors. This partnership will support Kenya’s climate ambitions while deepening access to long-term financing for businesses that drive sustainable growth.
The package includes two complementary pieces of equipment. The $100 million subordinated debt facility strengthens KCB Kenya’s Tier II capital, strengthens its balance sheet resilience and strengthens its role as a key financial intermediary across priority sectors. This capital support supports KCB’s strategic objective to allocate 25% of its lending portfolio to green initiatives with a focus on renewable energy, sustainable infrastructure, climate-smart agriculture and related value chains by 2031.
Additionally, the $50 million trade guarantee will enable AfDB to provide up to 100% indemnification to confirming banks against non-payment risks associated with letters of credit and similar trade finance instruments issued by KCB. This risk-sharing mechanism is expected to enable further trade flows for Kenyan businesses, particularly small and medium-sized enterprises (SMEs), reducing transaction costs and increasing access to international markets.
AfDB East Africa Director-General Alex Mubiru said the partnership reflects a shared commitment to harmonizing economic growth and environmental management. He said KCB is demonstrating leadership in the field of sustainable finance and this collaboration is expected to deliver measurable climate change outcomes along with inclusive development benefits for Kenya and the wider region.
This funding is designed to have a tangible impact on small and medium-sized businesses, women-led businesses, and climate-resilient projects. Expected outcomes include greater access to long-term financing, job creation, improved competitiveness for importers and exporters, and increased resilience to economic and climate-related shocks. The transaction was completed following a rigorous evaluation and due diligence process, underscoring the Bank’s countercyclical role and position as a trusted development finance partner.
KCB Bank Kenya has steadily advanced its climate action and financial inclusion agenda in recent years, aligning commercial growth with social and environmental impact. The bank’s sustainability strategy focuses on green lending, community development and supporting sectors critical to Kenya’s transition to a low-carbon economy.
KCB Bank Kenya Managing Director Anastasia Kimutai said the facility will strengthen the bank’s ability to support customers developing green projects. He explained that the partnership is a milestone in KCB’s sustainability efforts and will enable the bank to scale up green financing, foster private investment and contribute to Kenya’s goal of achieving net-zero emissions by 2050.
The momentum of KCB’s green portfolio underscores this trajectory. Last year, the bank disbursed $402 million in green loans, increasing the proportion of green assets from 15% to 21.32% in 2023. The loans supported products and projects related to the energy transition, including renewable power, blue economy, e-mobility solutions and climate change adaptation. With support from AfDB, KCB is positioned to further deepen its impact, expand its trade finance reach and mobilize significant capital towards Kenya’s green and inclusive growth.
