The African Development Bank Group (AfDB) and KCB Bank Kenya have signed a $150 million financing package aimed at expanding green finance and strengthening trade finance capacity in East Africa’s largest banking market.
The agreement is expected to deepen Kenya’s transition to low-carbon economic growth while supporting small businesses, women-led enterprises and climate-resilient projects across the country.
The package includes a $100 million subordinated debt facility that will reinforce KCB Bank Kenya’s Tier II capital, allowing the lender to expand its reach as a financial intermediary in strategic economic sectors.
The bank intends to allocate 25% of its portfolio to green initiatives by 2031, with a focus on renewable energy, agriculture, blue economy projects and climate adaptation.
An additional $50 million transaction guarantee will enable AfDB to provide up to 100% coverage to confirming banks, shielding them against payment risks associated with letters of credit and similar trade instruments issued by KCB.
AfDB Director General for East Africa, Alex Mubiru, said the partnership reflects the Bank’s commitment to advancing green finance across the continent.
“KCB has demonstrated strong leadership in sustainable finance, and we are confident this collaboration will deliver measurable climate impact and inclusive development for Kenya and the region,” he said.
The initiative aligns with AfDB’s broader mandate of supporting resilient economic development through rigorous appraisal and due-diligence processes. The partnership is expected to unlock longer-term financing for small and medium-sized enterprises, as well as businesses vulnerable to climate shocks.
Women-led enterprises, climate-resilient ventures and firms requiring enhanced access to credit are among the beneficiaries targeted by the programme.
KCB Bank Kenya Managing Director, Annastacia Kimtai, said the deal marks an important milestone in the lender’s sustainability agenda.
She noted that strengthening KCB’s capacity to fund green projects will allow the bank to deepen its impact, catalyse private investment and accelerate Kenya’s path toward net-zero emissions by 2050.
“This partnership reinforces our commitment to scaling up green lending and supporting Kenya’s transition to a greener and more inclusive economy,” Kimtai said.
KCB, the largest commercial bank in Kenya by branch network, has significantly expanded its involvement in climate action, financial inclusion and community development in recent years.
In 2024, the bank disbursed $402 million in green loans, raising its overall green portfolio to 21.32%, up from 15% the previous year.
The bank has broadened its sustainable lending to include projects in electric mobility, blue economy industries and climate adaptation.
The financing package is expected to strengthen KCB’s trade finance operations, a crucial component for businesses reliant on imports and cross-border transactions.
The AfDB guarantee will allow global correspondent banks to increase their exposure to KCB, reducing perceived risks and enabling larger volumes of trade deals to proceed.
This is expected to support Kenyan firms involved in manufacturing, agriculture, construction, retail and other sectors dependent on international supply chains.
The AfDB-KCB partnership is also part of Kenya’s wider push to integrate sustainability into its financial sector. The country has been vocal about its ambition to align its banking system with global environmental, social and governance (ESG) standards while expanding climate-aligned investments.
The collaboration comes at a time when African economies are facing mounting pressures from climate change, including droughts, floods, disrupted agricultural cycles and rising adaptation costs.
Access to affordable finance remains a critical barrier to climate resilience in the region, especially for small businesses. By enabling KCB to extend long-term funding and scale up green projects, the AfDB credit package aims to address some of these structural challenges.
The agreement is expected to be fully concluded in the first quarter of 2026, pending regulatory approvals. Both institutions say the partnership will deliver long-term socioeconomic gains through investment in sustainable sectors, climate-resilient infrastructure and expanded access to trade finance.
As the country works toward its 2050 net-zero target, partnerships between commercial banks and development finance institutions are expected to play a critical role in expanding access to credit, driving innovation and supporting job creation within the green economy.
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