The African Development Bank Group (AfDB) has announced the approval of €19.2 million in funding to support Micro, Small, and Medium Enterprises (MSMEs) and women entrepreneurs in Kenya.
The equity investment of €18 million will be directed to the Africa Guarantee Fund (AGF), while an additional €1.2 million will be allocated to support youth and women engaged in agricultural value chains.
The funding, provided by the European Union (EU) as part of its partnership with the African Development Bank Group, aims to address the unmet demand for MSME financing in Kenya, which has been further exacerbated by the disruptions caused by the Covid-19 pandemic. The International Finance Corporation (IFC) estimates a finance gap of $19.38 billion for SMEs in Kenya, representing 30 percent of the country’s GDP.
Recognizing the importance of women and youth in the agricultural sector, Mrs. Nnenna Nwabufo, the Bank Group’s Director General for East Africa, emphasized the significance of the approval as a milestone in the implementation of the EU partnership. The agriculture sector is a vital source of employment, particularly in rural areas, and contributes to 60 percent of Kenya’s exports.
However, women entrepreneurs face numerous constraints in accessing finance and growing their businesses, including limited business management skills, legal and policy barriers, lack of access to networks and information, and inadequate financing options tailored to their specific needs. Banks often perceive women-led businesses as risky due to collateral limitations and smaller business sizes, resulting in limited lending opportunities.
The funding approved by the AfDB aims to address these challenges and catalyze private investment in the women entrepreneurship segment. By supporting women entrepreneurs and fostering inclusive economic growth, the aim is to bridge the gender gap and promote sustainable development in Kenya.
The approval of €18 million for the Africa Guarantee Fund will enhance its capacity to provide guarantees and other financial instruments to facilitate access to finance for MSMEs. The remaining €1.2 million will specifically target youth and women engaged in agricultural value chains, aiming to support their entrepreneurial ventures and promote job creation in the sector.
The AfDB Group’s commitment to addressing the financing needs of MSMEs and women entrepreneurs aligns with efforts to drive economic recovery and resilience in Kenya. The funding will contribute to reducing the finance gap and creating a more conducive environment for inclusive growth and sustainable development.
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