The Cooperative Bank of Kenya on Tuesday (September 21) signed a loan portfolio guarantee agreement with the African Guarantee Fund (AGF) for small and medium enterprises in the amount of Ksh 750 million to increase transaction financing green in Kenya.
The guarantee facility will allow, on the one hand, Co-op Bank to strengthen its commitment to the financing of Micro, Small and Medium Enterprises (MSME) and promote emerging companies in Kenya involved in green energy and solar installation projects.
According to data from the International Renewable Energy Agency, increasing demand and technological advancements have contributed to a significant decrease in the costs of solar photovoltaic (PV) systems over the years.
Solar costs have fallen by more than 80% since 2010, while the discounted cost of energy generated by large-scale solar power plants is less than 10 Ksh / kWh, compared to around 38 Ksh / kWh a decade ago. The figures further show that between 2018 and 2019 alone, the price of solar energy fell by 13%.
Commenting on the signing of the agreement, Co-op Bank Director – Corporate and Institutional Banking, Jacquelyne Waithaka said: “The challenge that banks and other financiers face in financing solar energy relates to the type of securities. that customers offer as collateral. for credit. Solar panels and inverters, for example, are not preferred collateral because they cannot be easily liquidated in the event of default. Co-op Bank’s partnership with AGF has created an instrument that overcomes this challenge, thus giving the bank considerable capacity to effectively finance solar energy programs.
A branch of Co-op Bank Kenya in Nairobi
“Energy costs remain one of the heaviest input costs for many MSMEs. This partnership is expected to have a significant positive impact on MSMEs involved in manufacturing, light industry and agribusiness by reducing the cost of doing business, thereby making them more competitive. For the environment, the successful adoption of the program will lead to the reduction of carbon emissions. It is also expected that as the prices of solar technologies continue to fall and AGF continues to develop other products, more Kenyans will afford renewable energy products and services. “
AGF Group Business Development Director Franck Adjagba reaffirmed AGF’s commitment to promote sustainable economic growth in the country.
He said: “Banks in Kenya urgently need risk mitigation instruments to support their SME lending activities. However, we must aim for economic growth without degrading the environment. Sustainability improves the quality of our lives, protects our ecosystem and preserves natural resources for future generations. Our partnership with Co-op Bank today reflects our commitment to increasing funding for green sector businesses.
Through this partnership, Co-op Bank will take advantage of opportunities to clients across the country.
The African Guarantee Fund (AGF) is a non-bank financial institution whose objective is to promote economic development, increase employment and reduce poverty in Africa by providing financial institutions with guarantee products and assistance. capacity development specifically aimed at supporting SMEs in Africa.
The African Guarantee Fund was founded by the Government of Denmark through the Danish International Development Agency (DANIDA), the Government of Spain through the Spanish Agency for International Cooperation and Development (AECID) and the African Development Bank (AfDB).
The other shareholders are the French Development Agency (AFD), the Nordic Development Fund (NDF), the Investment Fund for Developing Countries (IFU) and the KfW Development Bank (KfW). AGF is rated AA- by the rating agency Fitch.
Headquarters of the Co-operative Bank in Nairobi CBD.