World Bank Unlocks Ksh5.5 Billion Green Fund to Empower Kenyan SMEs

In a major boost to Kenya’s climate resilience and economic transformation, the World Bank has approved approximately Ksh5.55 billion ($43 million) in new funding to support small and medium-sized enterprises (SMEs) in adopting climate-friendly technologies.

The commitment, announced on January 15, 2026, is part of the broader Kenya Jobs and Economic Transformation (KJET) project. The funds will be channeled through the Kenya Development Corporation’s (KDC) Green Investment Fund (GIF), a dedicated vehicle designed to bridge the financing gap for green enterprises while positioning Kenya as a regional leader in climate finance.

The fund targets high-growth areas that align with Kenya’s Nationally Determined Contributions (NDCs) and broader climate goals. In the realm of electric mobility and transport, the fund seeks to accelerate the adoption of electric vehicles and climate-smart logistics to reduce urban pollution. For the building sector, it supports energy-efficient retrofitting and the use of low-carbon construction materials in Kenya’s rapidly growing cities. In sustainable agriculture, the focus remains on funding climate-smart farming techniques that increase food security and reduce the environmental footprint of smallholder farmers. Finally, the fund targets waste management by scaling circular economy businesses that specialize in recycling and turning waste into value-added products

A central feature of the initiative is its blended finance approach. By combining public resources and technical assistance with the World Bank’s capital, the fund aims to “de-risk” green projects, making them more attractive to private investors and commercial banks.

“The Green Investment Fund framework has strong potential as a replicable model capable of meeting SMEs’ demand for patient capital while advancing climate adaptation and mitigation,” said Hassan Zaman, World Bank Regional Director, during a high-level review meeting in Nairobi.

To ensure commercial discipline and transparency, the World Bank emphasized that the fund will be managed by an independent fund manager, a selection process for which is currently in its final stages.

The strategy also places a heavy emphasis on social equity. The investment plan explicitly prioritizes support for women-owned and women-led businesses, recognizing that climate impacts often disproportionately affect vulnerable groups and that gender equality is a key driver of sustainable economic growth.

The funding arrives at a critical juncture. Climate-related disruptions, such as the severe droughts and floods witnessed in recent years, cost Kenya’s economy an estimated 2% to 2.8% of GDP annually. For SMEs—the engine of Kenya’s employment—these disruptions can wipe out inventories and spike operating costs.

Norah Ratemo, Director General of the Kenya Development Corporation, noted that the move is “not merely an environmental instrument but a jobs and competitiveness play.” By helping firms modernize and cut energy waste, the fund is expected to strengthen the long-term resilience of the Kenyan business ecosystem.

This latest injection builds on the success of the Supporting Access to Finance and Enterprise Recovery (SAFER) project, further integrating Environmental, Social, and Governance (ESG) principles into Kenya’s financial sector. Participating institutions, including SACCOs, are already rolling out tailored digital lending windows to ensure even micro-businesses can access these green transition tools.