The Kenyan government is turning to Public-Private Partnerships (PPPs) as a key strategy to attract green finance for critical projects in sectors such as energy and agriculture. Investment Cabinet Secretary Lee Kinyanjui has urged commercial banks to scale up lending towards environmentally sustainable ventures, highlighting the need for a collaborative approach between government and financial institutions to fund the country’s green transition.
In a significant policy move, the Central Bank of Kenya (CBK) has unveiled a green finance taxonomy, a regulatory framework aimed at guiding and lowering the cost of credit for green projects. The taxonomy is designed to standardize the classification of environmentally sustainable investments and provide clarity for lenders and investors. It also mandates banks to report on their lending activities to environmentally and climate-focused businesses.
“With this taxonomy, we are giving financial institutions the tools to identify and prioritize sustainable investments,” said CS Kinyanjui. “This will not only unlock new sources of funding but also ensure Kenya maintains its position as a continental leader in green financing.”
Kenya currently accounts for nearly 50 percent of all green finance flowing into Africa, underscoring its role as a key player in the region’s sustainability agenda. The government is banking on enhanced regulations and PPPs to increase access to affordable credit for businesses engaged in green initiatives, including renewable energy, climate-smart agriculture, and waste management.
Commercial banks are also taking proactive steps. Stanbic Bank, for instance, now screens all loans exceeding Ksh 130 million to ensure borrowers integrate green components in their projects. In 2024 alone, the bank disbursed over Ksh 500 million in solar loans, supporting Kenya’s transition to renewable energy and the goal of achieving net-zero carbon emissions.
With global pressure mounting for climate action and sustainability, Kenya’s pivot to green finance through PPPs and targeted regulations could position it as a model for other African nations. As stakeholders work together to boost green investments, the nation stands to benefit from enhanced climate resilience, job creation, and long-term economic growth rooted in sustainability.
