Co-operative Bank of Kenya and the United Nations Capital Development Fund (UNCDF) have launched a new financing facility aimed at expanding access to capital for technology-driven businesses and entrepreneurs across Kenya.
The facility, launched under the Digital Platforms Kenya (DigiKen) Programme, is backed by a USD900,000 (KSh116.6 million) Loan Portfolio Guarantee, with the potential to support a maximum portfolio value of USD1.8 million (KSh233.1 million).
The financing programme targets businesses operating in four key segments of Kenya’s digital economy, including fintech companies, digital credit providers, e-commerce and digitally enabled micro, small and medium enterprises (MSMEs), as well as digital innovation hubs and ecosystem enablers.
Through the partnership, Co-op Bank has developed financing solutions tailored to the needs of digital businesses, including working capital, business expansion and technology investments.
The facility seeks to address financing constraints that have historically limited the ability of technology-driven businesses to expand, invest in new solutions and create employment.
Co-op Bank Group Managing Director and Chief Executive Officer, Dr Gideon Muriuki, said the initiative would help address the financing gap facing digital entrepreneurs.
“Kenya’s digital economy is creating exciting opportunities for businesses of all sizes, yet many entrepreneurs still struggle to access the financing needed to turn ambition into growth,” Muriuki said.
He added that the partnership would provide practical financing solutions to enable innovative businesses to invest, expand and create jobs while contributing to Kenya’s competitiveness in the digital economy.
UNCDF Regional Investment Team Lead for East and Southern Africa and the Arab States Region, Omon Ukpoma-Olaiya, said many businesses struggle to secure financing because they do not fit conventional lending models.
The facility is designed to enable lenders to reassess the financing potential of businesses that may have limited collateral or credit history but demonstrate potential for growth.
Under the risk-sharing arrangement, UNCDF will absorb a portion of the credit risk on eligible loans extended by Co-op Bank to qualifying digital enterprises.
The guarantee will cover 50 per cent of the outstanding principal, with the coverage increasing to 70 per cent for borrowers operating in Kenya’s Arid and Semi-Arid Lands (ASALs).
Co-op Bank will remain responsible for originating, assessing and managing the loans, while the guarantee is expected to enable the bank to extend financing to businesses that may not meet conventional lending requirements.
Principal Secretary, State Department for ICT and Digital Economy, Eng. John Tanui, welcomed the initiative, saying improved access to financing could help entrepreneurs and MSMEs turn ideas into businesses while strengthening local innovation.
The facility is also expected to support economic inclusion by improving financing opportunities for youth- and women-led enterprises, as well as businesses operating in underserved communities.
The initiative forms part of the broader Digital Platforms Kenya (DigiKen) Programme, which is implemented by UNESCO as lead, alongside UNCDF, UN Women and UNEP, in coordination with the UN Resident Coordinator’s Office.
The programme is being implemented in partnership with the Ministry of Information, Communications and the Digital Economy and supported through the Joint SDG Fund.
The new financing facility comes as Kenya continues to expand its digital economy, with technology businesses, e-commerce platforms, fintechs and digitally enabled MSMEs playing an increasing role in innovation and employment creation.
Announced ahead of the 81st United Nations General Assembly High-Level Week, the facility reflects broader efforts to improve access to capital for entrepreneurs and promote inclusive economic growth.
Through the partnership, Co-op Bank and UNCDF aim to strengthen the capacity of digital enterprises to access financing, invest in technology, expand operations and create jobs across Kenya.