The lender said Thursday it had received the subordinated loan from eco business Fund and will extend the same to sustainable agribusinesses, such as those in the coffee and tea.
The facility marks the first investment in Kenya for eco business Fund, which specialises in promoting use of natural resources, and mitigating and adapting to climate change.
Co-operative Bank of Kenya #ticker:COOP has received Sh1.1 billion ($10 million) loan from Luxembourg-based impact investment fund for on-lending to agribusinesses.
The lender said Thursday it had received the subordinated loan from eco business Fund and will extend the same to sustainable agribusinesses, such as those in the coffee and tea.
The facility marks the first investment in Kenya for eco-business Fund, which specialises in promoting use of natural resources, and mitigating and adapting to climate change.
Co-op Bank chief executive Gideon Muriuki in a statement said the loan will provide much-needed financing for agricultural businesses, especially in light of the Covid-19 hardships facing many businesses.
“This new partnership with eco.business Fund that makes available $10 million for on-lending to farmers is a winner on many fronts,” said Mr Muriuki.
“It provides financing that is structured to suit the financing cycles of agriculture, and also comes with the support mechanisms to assist farmers to make a successful pivot towards sustainable, climate-smart agriculture.”
Agriculture contributes about a third of Kenya’s gross domestic product but commercial lending to this sector remains low, limits the ability of producers and processors to invest in sustainable production practices.
Chairperson of the board of directors at eco.business Fund Jens Mackensen said the deal seeks to promote green finance.
“We are excited about our first investment in Kenya. This new partnership with Co-op promises to be a fruitful one as the bank is well positioned to act as an enabler of sustainable production practices,” said Mr Mackensen.
Mr Mackensen.
The fund supports sustainable operations in agriculture, fishery, forestry and tourism sectors and targets businesses that hold sustainability certification or seeking loans to make sustainable investments.
The loan looks set to increase Co-op’s loan book that is classified as green portfolio from the current Sh3.4 billion.
Co-op is among the top lenders in Kenya that are growing their focus on sustainability financing that rides on Environmental and Social Governance (ESG) practices.
The lender has adopted IFC’s exclusion list which defines the types of projects such as trade in radioactive materials that the entity does not finance.
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