The Co-operative Bank of Kenya (Co-op Bank) has received a major boost after it received KSh 1 billion from eco.business Fund.
This was eco.business’s first investment in Kenya. The subordinated loan will be on-lent to sustainable agribusinesses, contributing to the fund’s mission of conserving biodiversity, promoting the sustainable use of natural resources, and mitigating and adapting to climate change.
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.
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 this new investment, 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.
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.
Jens Mackensen, chairperson of the Board of Directors of the eco.business Fund said in a statement that they are excited about their first investment in Kenya.
“Kenya is 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,” said Mackensen.
He indicated that providing tailored financing to the agricultural sector, a key driver of economic activity and sustainable development in Kenya is the only best way they can collectively promote green finance to generate positive environmental and social impact.
Commenting on the sign-off of this partnership, the Group Managing Director and CEO of Co-op Bank Gideon Muriuki said that right from their founding as a bank for agriculture co-operatives, they have always strived to support farmers in their journey to achieve sustainable livelihoods.
“This new partnership with eco.business Fund that makes available Ksh 1 billion 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,” said Muriuki.
