How Kenya Climate Ventures is scaling up green financing in Kenya
As climate change and environmental damage due to human activities continue to remain a debatable topic amongst the vast majority, investors and financial organizations are finally recognizing the importance of changing their ways for the better and investing in sustainable technologies to help improve lives and the world in general. Through this type of green financing they can recognize the environmental and financial benefits of these new technologies.
Global funds like the Green Climate Fund (GCF) and country-based financiers such as Kenya Climate Ventures (KCV) in Kenya, among others, are proving to be the leading investors in mobilizing both international and local resources to narrow the green financing gap.
Kenya Climate Ventures (KCV) - a subsidiary of KCIC group - is an impact investment company that funds and trains small and medium-sized enterprises operating in the clean technology sector: renewable energy, waste management, agribusiness, water management and commercial forestry.
"At KCV, we provide commercial capital, technical and business development support to enable these companies to scale their business models commercially and improve operational capacities and efficiencies," Noel Amoit, the Enterprise Development Manager at KCV says.
Currently, the company has a portfolio of management under 16 companies with a fund size of USD3.4 million. Some of the companies benefiting from the investment include Exotic EPZ, Mace Foods, Kilifi Moringa which are in agribusiness, Vuma Biofuels (renewable energy), Sistema. bio (biogas solutions provider), Acacia Innovation which fabricates briquettes for schools and factories (waste management) and Ofgen a solar company (solar energy). With the support of KCV, Ofgen recently installed a 1.5MW solar grid in Williamson Tea Kaimosi.
To gauge which enterprises qualify for their funding and training, enterprises need to have a proof company module and post-revenues, easily accessible market for their products, legal due diligence, ability to scale up and ability to raise capital and hold up to their business plan.
“In matters relating to green financing, we usually look for a company that has a footprint in climate adaptation. While assessing these companies, we are mainly keen on what extent they are contributing to climate adaptation and mitigation,” Noel says.
To add on that, the company also relies on incubating organisations and companies like Kenya Climate Innovation Center (KCIC) to incubate potential enterprises when they are still in the pre-revenue stage and also help them build a solid business model before KCV comes in with funding.
“We rely on companies like KCIC to incubate them when they are pre-revenue and also help them build a solid business model, then KCV comes in with the capital,” she adds.
Given the role that green financing plays both nationally and globally, especially in achieving sustainable development goals, there is still a gap in the market that needs to be filled. With the aim of boosting green financing in Kenya, Kenya Bankers Association (KBA) and KCIC Group recently signed a memorandum of understanding to help fill this gap.
“Under this agreement, both companies are looking to improve green financing through leveraging on climate change innovations and research and promoting the growth of large enterprises including financial institutions as well as small and medium enterprises,” Victor Ndiege, the CEO of Kenya Climate Ventures explains.
Despite the potential this partnership holds, the government still needs to play its part in ensuring green growth of the country. This has however not always been the case so far given the strict policies taming green growth in the country, especially in the renewable energy sector. The government needs to create robust policies that encourage the growth of cleantech companies to drive green growth.
Luckily, Danida - a funding partner of KCV - under their policies, has an enabling environment item, which advocates for forward-looking policies that are more accommodative of upcoming innovations through the entrepreneurs that they support.
They also support Kenya Business Advocacy Fund – an institution that advocates for policy changes to make it easy to do business and they also developed a report called GESIP (Kenya green economy strategy and implementation plan) together with the Ministry of Environment that provides a framework to spur a green revolution in Kenya.