The African Development Bank Group (AfDB) and KCB Bank Kenya Limited have sealed a landmark $150 million financing package, aimed at accelerating climate-smart investments and bolstering trade finance for Kenyan businesses.
The finance contains a $100 million subordinated debt instrument that qualifies as Tier II capital by which KCB’s balance sheet will be greatly strengthened as well as a supporting trade finance risk participation A guarantee worth $50 million will provide up to 100 per cent coverage for confirming banks against non-payment risks on letters of credit and similar instruments issued by KCB.
The partnership will inject funds into sustainable projects in the areas of energy, infrastructure, and agriculture that are climate-resilient. Also, these funds will be directed towards the blue economy, e-mobility, and adjustment to climate change issues with a particular focus on MSMEs and women-ledbusinesses.
Alex Mubiru, East Africa Director-General at AfDB, referred to the deal as “an affirmation of our mutual dedication to facilitating Africa’s eco-friendly transformation while making sure that economic growth remains accompanied by environmental protection.”
He commended KCB’s initiative in the environmental area of finance and indicated that the synergy between the two would lead to a tangible climate impact and regional development that will benefit all the people.
Annastacia Kimtai, Managing Director of KCB Bank Kenya, welcomed the agreement as “an important point in our path towards sustainability”. She also anticipated that the facility would help the bank “extend green lending, deepen the impact, attract private capital and assist Kenya in reaching net-zero emissions by 2050.”
This pact is in line with KCB’s excellent performance in the green sector, the bank’s portfolio rose from 15 per cent in 2023 to 21.32 per cent last year due to the disbursement of $402 million in climate-focused loans.
The deal which was subject to a thorough review and due diligence, is a convincing argument of AfDB’s role as a counter-cyclical financier.
It also highlights KCB’s status as a major player facilitating Kenya’s transition to a green and inclusive economy while increasing the bank’s capacity in trade flow intermediation and job creation in the targeted sectors.