Co-operative Bank of Kenya has entered a landmark partnership with the United Nations Capital Development Fund to establish a shared-risk lending facility aimed at boosting financing for Kenya’s fast-growing digital small business sector.
The initiative, anchored under the Digital Platforms Kenya Programme (DigiKen), will channel funding to youth-led and digitally enabled micro, small, and medium enterprises (MSMEs) over the next two years. The partnership will support an initial lending portfolio of KES 233.1 million (USD 1.8 million), with UNCDF providing risk guarantees to expand access to credit.
Through this arrangement, the bank will retain full control over its lending decisions while leveraging UNCDF’s backing to extend loans to a broader pool of businesses, particularly those traditionally underserved by formal financial systems. The facility is expected to significantly deepen financial inclusion, especially in Kenya’s arid and semi-arid regions where access to credit remains limited.
Vincent Marangu, Director of Co-operatives Banking at Co-operative Bank, said the partnership underscores the lender’s commitment to responsible and impact-driven financing. He noted that the collaboration would enable the bank to support ambitious, commercially viable businesses without compromising on credit standards.
“Working with UNCDF gives us the means to scale responsible lending while expanding opportunities for Kenyan enterprises ready to grow,” he said.
The partnership also incorporates the Kenya Post-Harvest Solar Cooling Programme (Cold Chain), which focuses on financing solar-powered storage solutions for farmers, agri-SMEs and rural processors.
The programme aims to reduce post-harvest losses and improve agricultural value chains through climate-smart infrastructure.
According to Co-operative bank, the Digiken and Cold Chain programmes are expected to support a total lending portfolio of KES 756 million (USD 5.84 million), signaling a significant boost to both the digital and agricultural sectors.
According to UNCDF Regional Investment Team Lead Omon Ukpoma-Olaiya, access to affordable financing remains a major barrier for MSMEs operating in Kenya’s digital platform economy.
She noted that the guarantee facility would help de-risk lending, unlock capital for innovative enterprises, and stimulate broader economic development.
The collaboration aligns with Kenya’s national priorities of advancing digital transformation and enhancing climate resilience. While DigiKen focuses on empowering youth-driven digital enterprises, the Cold Chain initiative supports the transition to low-carbon agricultural practices.
The partnership positions Co-operative Bank as a key player in driving inclusive growth, combining global development support with its longstanding footprint in community-based banking.