Businesses in green energy and solar installation projects will now be able to access financing from Co-operative Bank of Kenya after it signed Sh750 million deal with African Guarantee Fund (AGF) for small businesses going green.
The partnership will allow the lender to finance Micro, Small and Medium Sized Enterprises (MSMEs) while promoting the green sector in the country.
AGF Group Director of Business Development Franck Adjagba said banks in Kenya are in dire need of risk mitigating instruments to support their lending activities to SMEs
“However, we should aim for economic growth without degrading the environment. Our partnership with Co-operative Bank today reflects our commitment to increase financing of businesses in the green sector,” he said.
Co-operative bank’s Director of Corporate and Institutional Banking Jacquelyne Waithaka said that the challenge bankers and other financiers have had with respect to solar energy is that of securities offered.
“Solar panels and inverters, for instance, are not a preferred security because they cannot be easily liquidated in case of loan default. Co-op Bank’s partnership with AGF has created an instrument that overcomes this challenge, thereby giving the
bank considerable ability to finance solar energy programs effectively,” she said.
“We hope that as the prices of solar solutions become more affordable, and AGF continues to develop other products, we will be able to finance solar products that reach an even greater number of Kenyans.”
Green financing is another viable option that offers new opportunities for scaling up public and private investments in renewable energy generation.
Many businesses are turning to solar energy to cut reliance on power generators that have raised production costs.
Power generators have raised production amid reduced consumption by homes and businesses in the wake of Covid-19.
The government had sought to expand renewable energy generation in its overall power development plan for the period between 2017 and 2037.
It projects that, by 2037, renewable energy sources will provide over 60 per cent of the country’s installed power capacity.