This isn’t about PR or green labels for marketing brochures, accountability has become indispensable. The CBK has rolled out the Kenya Green Finance Taxonomy (KGFT)—a list that defines what’s actually green and what’s not. 

Banks are expected to use this as a yardstick when deciding who gets the money and at what environmental cost.

And it’s not just about making sure banks say the right things. It’s about what they fund. The move targets one of the biggest problems in sustainable finance—greenwashing. 

That’s when companies slap on the “eco-friendly” badge without the receipts to back it up. According to CBK, “The taxonomy may support the reduction in financial sector risks through enhanced management of environmental performance.”

For now, banks in Kenya can ease into it. Voluntary use of the taxonomy is allowed until the end of the 18-month grace period. After that, compliance will no longer be optional. 

The regulator said: “The CBK is issuing this framework to commercial banks and mortgage finance companies licensed under the Banking Act (Cap 488) for application on a voluntary basis, for a period of 18 months from the date of issuance. Thereafter, implementation will be mandatory.”

So, what’s in it for the banks? Clarity. Direction. And for those who get it right—trust from green investors. KGFT will help lenders separate real climate-aligned projects from those just playing dress-up. 

It provides a consistent method for measuring how much of their portfolio is tied to carbon-heavy industries. Oil and gas, large-scale agriculture, and heavy polluters? They’ll no longer fly under the radar.

What’s driving this? The urgency is real. Kenya ranks among the countries most exposed to climate shocks. Floods, droughts, unpredictable rain patterns—you name it. And with vital sectors like agriculture and energy hanging in the balance, the financial sector can’t afford to keep fuelling the problem.

The KGFT has roots in international best practice, with the European Investment Bank lending its expertise. CBK says it’s tailored to local needs, but draws lessons from systems already running in the EU and South Africa. “During the 18-month transition, institutions will build their capacity and make the necessary adjustments in preparation towards mandatory application of the taxonomy,” CBK added.

To be clear, this isn’t just a box-ticking exercise. It’s a change in how the financial sector thinks. It changes how banks assess risk, who they lend to, and how they report on their exposure to climate-related liabilities. Once the full rollout kicks in, no bank will be able to hide behind vague sustainability claims.

The lobbying, aimed directly at President William Ruto, shows the level of interest Kenya’s financial infrastructure upgrade is receiving lately.

In a letter seen by Techeconomy, Ceva formally requested a meeting with Ruto, proposing to introduce NIBSS as a strategic partner for the project. 

The letter, signed by Ceva’s Managing Director, Yatin Mehta, suggested holding the meeting on 20th or 21st March 2025. “We are writing to formally request a meeting with you at your earliest convenience,” the letter stated. “The purpose of the meeting is to introduce our partner, the Nigerian Interbank Settlement Systems (NIBSS).”

The proposed meeting, including NIBSS CEO Premier Oiwoh, head of Partnerships Yvonne Ige, and Mehta himself, also expected David Kiprono, director of Webmasters Kenya Ltd—the company behind the development of Kenya’s e-Citizen platform.

NIBSS, owned by the Central Bank of Nigeria (CBN) alongside commercial banks, is the backbone of Nigeria’s financial transactions. Ceva, an international payments firm operating in India, Nigeria, Kenya, and Brazil, claims to process $40 billion annually. Their pitch? A solid system designed for Africa, by Africa.

“Our robust infrastructure is developed in Africa, for Africa,” Ceva wrote in its letter. “AfriGo is NIBSS’ answer to Africa having its own card processing, driving our economic independence and efficiency. India has done it with Rupay, China has done it with UnionPay, UAE has done it with Jaywan, Brazil has done it with PIX.”

The bid, however, is being resisted. Local financial heavyweights, including mobile money giant Safaricom and the Kenya Bankers Association (KBA), argue that instead of building a new FPS from scratch, the government should upgrade the existing PesaLink system. 

According to them, a fresh system could cost up to $200 million and take four years to complete, whereas improving PesaLink—a platform handling $8.5 billion annually—would be faster and cheaper.

The Central Bank of Kenya (CBK) has yet to decide on the FPS upgrade, but the competing interests show the high stakes. While NIBSS and Ceva see an opportunity to boost Kenya’s payment sector, others warn of potential disruptions and unnecessary costs.

For now, the ball is in CBK’s court. If the Nigerian-backed proposal gains traction, it could completely change digital transactions in Kenya, enhancing interoperability across banks, SACCOS, mobile money operators like M-Pesa, and fintech firms. 

But if Safaricom and the KBA succeed in their counter-lobbying, Kenya may opt for an upgrade rather than a full-scale overhaul.

This decision follows the CBK’s recent monetary policy changes, including a 75 basis point reduction in its benchmark rate, bringing it to 11.75%—its lowest level since the pandemic. 

The CBK previously issued repeated warnings about the widening gap between the Central Bank Rate (CBR) and commercial lending rates, which had reached a 31-month high in October, making obvious the slow pass-through of monetary policy adjustments to consumers.

Even with these cuts in the CBR, which had not been fully reflected in lending rates, the gap between the CBR and commercial rates continued to increase. 

The average interest rate on loans increased from 16.91% to 17.15% in October, showing the reluctance of Kenyan banks to reduce borrowing costs in response to the central bank’s actions.

On December 6, CBK Governor Kamau Thugge reiterated his call for banks to align their lending rates with the lower CBR, warning that failure to do so could harm the economy. 

He urged the banks to act in the same manner they had when increasing interest rates during periods of rising policy rates, emphasising that it was in their best interests to lower rates. He warned that the failure to reduce rates would have negative consequences for the economy as a whole.

Following the CBK’s pressure, the Kenya Bankers Association (KBA) announced that its 43 member banks would begin reviewing their loan interest rates, to make borrowing more affordable for both individuals and businesses. 

The KBA stated that individual banks had already begun issuing notices to customers regarding the upcoming rate reductions, which will take effect from December 2024. The association also emphasised that these reductions would be gradual, in line with current changes in monetary policy and other economic factors, such as credit risk.

The implementation of the rate cuts incrementally has questions about the full immediate benefits. While the move is welcomed, the KBA has urged the CBK to consider further rate reductions to stimulate economic growth and increase access to credit. 

At the same time, banks have been advised to carefully assess customers’ risk profiles, considering factors such as non-performing loans and the economic challenges that could affect borrowers’ ability to repay their debts.

As part of its initiative to address the issues impeding credit growth, the KBA is engaging with the government to tackle challenges, including the review of risk-based pricing models, resolving delayed payments to businesses, and addressing the backlog of litigation affecting credit expansion.

This latest development follows the CBK’s decision in early December to lower its base lending rate for the third consecutive month, from 12% in October to 11.25%. The CBK attributed this reduction to stable inflation, which stands at 2.8%, driven in part by a decline in the prices of goods and services.