Co-operative bank has secured Ksh.827.85 million (US$.7.5 million) from the African Guarantee Fund (AGF) for lending to small businesses going green in Kenya.
The loan portfolio will enable Co-op Bank to fund Micro, Small and Medium Enterprises (MSMEs) who are keen to promote green energy and solar installation projects in the country.
“Sustainability improves the quality of our lives, protects our ecosystem and preserves natural resources for future generations. Our partnership with Co-operative bank today reflects our commitment to increase financing of businesses in the green sector,” said AGF Group Director of Business Development Franck Adjagba.
According to figures released by the International Renewable Energy Agency, increased demand and technological advances have contributed to the significant decrease in solar photovoltaic (pv) systems costs over the years.
Solar costs have fallen by over 80 percent since 2010 while the levelized cost of energy generated by large scale solar plants is under Ksh.10 per kwh, compared to about Ksh.38 per kwh ten years ago.
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The figures further indicate that between 2018 and 2019 alone, the price of solar power fell by 13 percent.
“The challenge banks and other financiers have had in respect to solar energy is that of securities offered as collateral for credit. Solar panels and inverters are not a preferred security because they are not easily resold in case of default. Co-operative Bank’s partnership with AGF has created an instrument that will give the bank the ability to finance solar energy programs effectively,” said Co-operative bank’s Director, Corporate and Institutional Banking Jacquelyne Waithaka.
Small businesses in the country are exploring ways of consuming electricity, away prom power generators like KPLC who charge heavily for energy.
The loan portfolio signed will help these small businesses in the manufacturing, light industry and agro-processing sectors by reducing the cost of doing business.
“It is also expected that as the prices of solar solutions come down and AGF continues to develop other products, a greater number of Kenyans will afford renewable energy products and services,” added Waithaka.
In line with the loan portfolio, Co-operative bank will avail the upselling trade solutions, counterparty onboarding opportunities, trade commission growth and onboarding of new MSME package accounts.