Banks will fight for a Sh50 billion World Bank-backed fund aimed at supporting SMEs investing in climate change mitigation.
A new report by the World Bank notes that Kenya's State Department of Investment Promotion (SDIP) will provide the seed capital for the green investment fund (GIF).
The seed capital will be in the form of a mezzanine loan, a hybrid of equity and debt. GIF will mobilise funds from the private sector to manufacture electric vehicles (EVs), build green houses, provide water and sanitation, and smart agriculture.
The SDIP, which falls under the Ministry of Investment Trade and Industry), will be the executing agency through the Kenya Development Corporation (KDC).
Banks, mostly those with financial muscle, will be responsible for disseminating the funds.
“To crowd in private and IFI (International Finance Institutions) investment, the SDIP – MITI through KDC will serve as the anchor investor by providing junior/mezzanine debt into the Green Investment Fund with provisions for it to take on first losses and to cap its returns,” said the World Bank in a technical design detail note for the Kenya Jobs and Economic Transformation Project.
The Green Fund will be set up as a special-purpose vehicle to channel the proceeds of the World Bank loan and will be regulated by the Capital Markets Authority. It will also be managed by an independent, competitively selected fund manager.
The pipeline for the GIF includes electric vehicles whose equity funding studies by the World Bank estimates are $211 million (Sh27.4 billion). The funding will support various investments including EV manufacturing, charging infrastructure, battery technology and EV retrofitting.
