Green Lending Projects in Kenya

Green lending projects in Kenya refer to the financing of initiatives that contribute to environmental sustainability, including projects that focus on renewable energy, energy efficiency, climate change mitigation, and environmental conservation. These projects are aligned with the country’s commitment to reducing carbon emissions and achieving sustainable development goals.

Here are some of the key green lending projects and initiatives in Kenya:

1. Green Bonds

• Kenya’s first green bond was issued in 2019 by Acorn Holdings to finance green-certified student accommodation. The bond raised KSh 4.3 billion (about $40 million) and was listed on the Nairobi Securities Exchange (NSE) and the London Stock Exchange (LSE).
• Green bonds allow companies and projects to raise funds for environmentally friendly and sustainable projects, including renewable energy, energy efficiency, and waste management.

2. Renewable Energy Projects

• Kenya is a leading country in Africa in terms of renewable energy production, particularly from geothermal, wind, and solar sources. Many renewable energy projects have been supported by green lending initiatives.

Key projects include:

• Lake Turkana Wind Power Project: The largest wind farm in Africa, producing 310 MW of clean energy. It was partially funded by various international green financing bodies, including the African Development Bank (AfDB) and Standard Bank Group.
• KenGen’s Geothermal Projects: Kenya Electricity Generating Company (KenGen) is heavily involved in developing geothermal energy. Its projects, such as the Olkaria Geothermal Power Station, have received funding from international green finance sources like the World Bank and JICA (Japan International Cooperation Agency).
• Garissa Solar Plant: Funded by the Chinese government, this 50 MW solar power plant is the largest in East Africa. Green loans and grants were part of the financing model, supporting the clean energy agenda in Kenya.

3. Sustainable Agriculture and Climate Resilience Projects

• Kenya Climate Smart Agriculture Project (KCSAP): This project aims to increase agricultural productivity and build resilience to climate change. It is funded through green loans and grants from international financial institutions like the World Bank.
• AgriFi Kenya Challenge Fund: A European Union-funded project that offers grants and loans to agribusinesses implementing sustainable farming practices. The goal is to boost food security while reducing the carbon footprint of agricultural activities.

4. Green Financing by Local Banks

Many Kenyan banks are now offering green loans tailored to support environmental and climate-friendly projects. Some of the notable players include:

• KCB Bank (Kenya Commercial Bank): Through its Sustainability Financing initiative, KCB offers loans for renewable energy, energy efficiency, waste management, and water conservation projects.
• Co-operative Bank of Kenya: Co-op Bank has been involved in green lending by offering loans to customers who are investing in clean energy, including solar energy systems and energy-efficient projects.
• National Bank of Kenya: NBK provides financing for projects that involve renewable energy, such as solar, wind, geothermal, and biogas energy production. This financing is available for both individuals and businesses looking to adopt clean energy solutions.
• They support households, businesses, and institutions looking to install solar energy systems by offering loans tailored to the specific needs of renewable energy projects.
• The bank supports companies involved in waste management, particularly those focused on recycling and waste-to-energy projects.
• NBK has worked with clients who are implementing projects aimed at reducing waste and pollution, including supporting enterprises in the circular economy that turn waste into reusable products.

5. Affordable Housing with Green Standards

The Kenyan government has integrated green building standards into its affordable housing agenda under the Big Four Agenda. Green financing is supporting developers who are constructing energy-efficient homes with environmentally sustainable materials.

• The Acorn Green Bond mentioned earlier is a prime example of green lending for affordable, sustainable housing in Kenya.

6. Sustainable Transport Projects

• Electric Mobility: There has been a rise in green lending to support the development of electric vehicles (EVs) and e-mobility infrastructure in Kenya. Companies like NopeaRide (an electric taxi service) have received funding from local and international green investors.
• Nairobi Bus Rapid Transit (BRT): Kenya’s BRT project, which aims to reduce traffic congestion and carbon emissions in Nairobi, has also attracted green funding from development banks and climate-focused funds.

7. Climate Finance by International Development Partners

• Green Climate Fund (GCF): The GCF has financed several climate change mitigation and adaptation projects in Kenya, focusing on renewable energy, climate-smart agriculture, and community resilience-building.
• African Development Bank’s (AfDB) Green Bonds and Climate Finance: The AfDB has supported numerous green projects in Kenya, including renewable energy and environmental conservation initiatives.

8. Water and Sanitation Projects

• Green lending has also supported projects in water conservation and sustainable sanitation, particularly in rural areas. These projects aim to ensure sustainable management of water resources and reduce environmental degradation.
• Kenya Towns Sustainable Water Supply and Sanitation Program: Funded by loans from the African Development Bank (AfDB), this project supports improved water supply and sanitation services with a focus on environmental sustainability.

9. Waste Management and Circular Economy Initiatives

• Recycling and Waste-to-Energy Projects: Several Kenyan companies have received green financing to implement waste recycling and waste-to-energy projects. For example, TakaTaka Solutions, a waste management company, has received loans and grants from climate-focused investors to scale up its waste recycling efforts.
• Biogas Projects: Green financing is being directed towards biogas projects in rural Kenya, allowing communities to convert waste into energy, reducing reliance on unsustainable energy sources like firewood.

10. Financial Support for SMEs in Green Sectors

• Several financial institutions, including Equity Bank and KCB, offer green loans to small and medium-sized enterprises (SMEs) that are involved in environmentally friendly businesses such as clean energy, sustainable agriculture, and eco-friendly manufacturing.
• These green lending programs are often backed by international development partners like the International Finance Corporation (IFC).

Conclusion

Kenya has made significant progress in integrating green lending into its financial system, supporting projects that align with sustainability and environmental goals. Key sectors benefiting from green financing include renewable energy, sustainable agriculture, affordable green housing, electric mobility, and waste management. Both local and international financial institutions are playing a crucial role in ensuring that green projects are adequately funded, helping Kenya achieve its climate goals and build a more sustainable future.