The World Bank has committed Ksh5.55 billion (USD 43 million) to the Government of Kenya to accelerate green investments and create jobs, offering a major boost to the country’s climate and economic recovery agenda amid persistent economic pressures.
The funding will be channelled through the Kenya Development Corporation (KDC) via its Green Investment Fund, with a strong focus on supporting small and medium-sized enterprises (SMEs) that are adopting climate-friendly, sustainable, and low-carbon technologies.
The initiative comes at a critical time as Kenya grapples with high unemployment, rising energy costs, climate shocks, and constrained access to affordable financing for businesses.
Focus on Green Growth and Job Creation
According to KDC, the Green Investment Fund will prioritise SMEs operating in sectors with high potential for both job creation and environmental impact. These include:
- Electric mobility and green transport solutions
- Energy-efficient and green buildings
- Sustainable agriculture and climate-smart farming
- Waste management and circular economy solutions
By targeting these sectors, the fund aims to stimulate private-sector-led growth while supporting Kenya’s commitments to climate mitigation and adaptation.
Officials noted that the investments are expected to generate new employment opportunities, reduce carbon emissions, and strengthen the resilience of businesses and communities against climate-related risks.
Part of the KJET Project
The funding forms part of Component 3 of the Kenya Jobs and Economic Transformation (KJET) Project, a flagship World Bank-supported programme designed to unlock private sector investment and promote inclusive economic growth.
KJET focuses on:
- Increasing access to finance for SMEs
- Improving market access and competitiveness
- Promoting sustainable and green financing solutions
Under Component 3, public funds are used strategically alongside technical assistance and private capital to de-risk investments, making it easier for SMEs to adopt climate-aligned technologies that would otherwise be unaffordable or considered too risky by lenders.
“This blended finance approach allows us to crowd in private investors while ensuring long-term sustainability,” KDC officials explained.
Independent Fund Manager to Oversee Operations
KDC, which is implementing the programme on behalf of the government, confirmed that it is in the final stages of selecting an independent fund manager to run the Green Investment Fund.
The fund manager will be responsible for:
- Overseeing daily operations
- Ensuring strong governance and transparency
- Safeguarding the fund’s development and financial objectives
This structure is intended to enhance accountability, attract private capital, and ensure the fund delivers measurable economic and environmental results.
Progress Under SAFER Project Highlighted
In addition to KJET, KDC also highlighted progress made under the Supporting Access to Finance and Enterprise Recovery (SAFER) Project, another World Bank-backed initiative aimed at helping Kenyan businesses recover from economic shocks.
According to KDC:
- Over 37,000 enterprises across Kenya have benefited from SAFER
- 38 per cent of supported SMEs are women-owned
- The project has contributed to the creation of more than 25,000 jobs
The SAFER Project has played a key role in stabilising businesses affected by the COVID-19 pandemic, climate shocks, and tightening credit conditions.
Role of Financial Institutions and SACCOs
Financial institutions, including SACCOs, commercial banks, and microfinance institutions, have been instrumental in rolling out tailored financing solutions under the KJET and SAFER programmes.
These include:
- Digital lending platforms to speed up loan approvals
- Specialised SME loan products
- Risk-sharing mechanisms to encourage lending to green enterprises
KDC noted that these innovations have significantly expanded access to credit for micro and small businesses, particularly those outside traditional banking systems.
KDC: Green Fund Is a Critical Milestone
Speaking on the initiative, Norah Ratemo, Director General of KDC, said the Green Investment Fund represents a major milestone in Kenya’s transition to a sustainable economy.
“Through KJET and SAFER, KDC is delivering tangible results by crowding in private capital, strengthening financial intermediaries, and expanding access to patient and affordable finance for SMEs,” Ratemo said.
“The Green Investment Fund is a critical step towards scaling climate-smart investments that create jobs, enhance resilience, and support sustainable enterprise growth.”
She added that the fund aligns closely with Kenya’s long-term development plans, including Vision 2030 and the country’s climate commitments.
ESG Standards Embedded in Financing
KDC officials emphasised that the combined programmes integrate environmental, social, and governance (ESG) standards to ensure responsible financing.
These safeguards are designed to:
- Protect communities and workers
- Promote fair labour practices
- Minimise environmental harm
- Strengthen corporate governance among funded enterprises
The ESG framework also helps ensure that green investments deliver real, measurable benefits rather than simply meeting financing targets.
Strengthening Financial Inclusion and SME Resilience
The continued partnership between the Government of Kenya, KDC, and the World Bank is expected to deepen financial inclusion, particularly for underserved groups such as women, youth, and rural entrepreneurs.
By improving access to long-term, affordable financing, the programmes aim to:
- Strengthen SME resilience to economic and climate shocks
- Encourage innovation and technology adoption
- Support Kenya’s green growth and climate adaptation agenda
Analysts say the Ksh5.55 billion commitment signals strong international confidence in Kenya’s green transition strategy, even as the country navigates fiscal pressures and global economic uncertainty.
A Boost for Kenya’s Climate Agenda
With climate change increasingly affecting agriculture, infrastructure, and livelihoods, the Green Investment Fund is expected to play a key role in helping Kenya shift towards a low-carbon, job-rich economy.
If successfully implemented, the initiative could position Kenya as a regional leader in green finance, while delivering tangible benefits for businesses, workers, and the environment.