The African Guarantee Fund (AGF) has signed a loan portfolio guarantee agreement with the Co-operative Bank of Kenya (CBK) for $7.5 million. The guarantee facility will enable CBK to finance green small and medium-sized enterprises (SMEs), particularly in the supply of solar photovoltaic energy.
The Co-operative Bank of Kenya (CBK), a Nairobi-based financial institution, is launching a new range of bank loans for Kenyan small and medium-sized enterprises (SMEs) operating in the solar energy sector. It includes up-selling of business solutions, counterparty integration opportunities, growth in trade commission, and integration of new micro, small and medium enterprise (MSME) package accounts.
The launch of these financing options for Kenyan SMEs involved in solar energy was made possible by the $7.5 million guarantee facility provided to CBK by the African Guarantee Fund (AGF). “Banks in Kenya urgently need risk mitigation instruments to support their SME lending activities. However, we must aim for economic growth without degrading the environment. Sustainability improves the quality of our lives, protects our ecosystem and preserves natural resources for future generations. Our partnership with the Co-operative bank today reflects our commitment to increase financing for green businesses,” says Franck Adjagba, AGF’s Director of Business Development.
Kenya relies on solar for universal access to electricity by the end of 2022
Kenya is aiming for universal access to electricity by the end of 2022, up from the current 75%. Photovoltaic mini-grids are among the options being considered to bring power to rural communities that are home to a large proportion of the population, but are too remote to be electrified via the national grid.
The new financing packages for green SMEs offered by CBK and the trend in international solar costs will enable Kenya, East Africa’s largest economy, to move towards its energy ambitions. According to the International Renewable Energy Agency (Irena), rising demand and technological advances have contributed to a significant drop in the cost of solar photovoltaic systems over the years. Solar costs have fallen by more than 80% since 2010, while the discounted cost of energy generated by large-scale solar plants is less than $0.09 per kWh, or Kshs 10 per kWh, compared to about Kshs 38 per kWh a decade ago. According to the same source, between 2018 and 2019 alone, the price of solar power fell by 13%.