UK Offers Funds To Support SME’S in Kenya

The British High Commission in Nairobi has announced a USD $5.2 million fund to support Kenya’s Co-Operatives And Micro, Small And Medium Enterprises (SME) sector, with plans to mobilize up to USD $300 million in sustainable finance.

The initiative was implemented through FSD Africa, which aims to transform SME financing in Kenya, where businesses
currently face prohibitive interest rates of up to 40%, by providing affordable credit access to at least 10,000 MSMEs and supporting over 200,000 people through improved basic services.

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The Listed SME Debt Fund is an approach to addressing Kenya’s SME financing challenges, targeting USD $240 million from domestic institutional investors and the remainder from foreign investors. This initiative is important given that SMEs constitute 98% of Kenya’s businesses and contribute 24% to the country’s GDP, while providing employment to approximately 14 million people, especially among marginalized groups.

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The fund’s structure is designed to create a new asset class for Kenyan institutional investors, particularly pension funds, which currently manage assets exceeding USD $30 billion but have yet to fully utilize their 30% alternative asset investment allowance.

By providing a de-risked investment vehicle that will be listed and managed in Kenya, the fund aims to bridge the critical financing gap while offering attractive
returns to investors