The UK government has announced a Sh671.8 million ($5.2 million) commitment to support micro, small, and medium enterprises (SMEs) in Kenya to boost economic growth and job creation through sustainable investment solutions.
The investment will be made through a special fund known as The Listed SME Debt Fund, sponsored by FSD Africa. The fund aims to mobilise up to Sh38.8 billion ($300 million) in sustainable financing to provide accessible credit to SMEs.
Of this target, Sh31 billion ($240 million) will be raised from local institutional investors, with the remainder coming from international investors.
The fund is expected to support at least 10,000 MSMEs, benefit 50,000 households, create and sustain more than 89,000 jobs, and improve access to basic services for more than 200,000 people.
“We must lower the cost of borrowing for Kenyans. This fund further bolsters the UK’s financial toolkit in Kenya which has supported long-term job creation and economic growth over many years, and it will deliver for all the hardworking hustlers of this country – especially women, young people, and persons with disabilities – who are often pushed right to the margins of the Kenyan economy. The UK’s economic relationship with Kenya is the cornerstone of the UK-Kenya strategic partnership – and we look forward to delivering this together,” said Neil Wigan, British High Commissioner to Kenya.
By reducing the cost of borrowing, the fund will support a wide range of Kenyan businesses, from artisans to financiers and farmers, and will be listed and managed in Kenya.
The fund will also provide a new opportunity for Kenyan investors to de-risk investments in MSMEs while offering attractive returns.
The SME-listed fund also introduces a new asset class, providing an opportunity for portfolio diversification and stability, in line with FSD Africa’s mission to deepen and broaden capital markets through innovation.
SMEs play a crucial role in Kenya’s economic growth, accounting for 98 percent of businesses and contributing about 24 percent of Kenya’s GDP.
In addition to their economic impact, SMEs are essential for job creation, especially for marginalised groups such as youth, women, and people with disabilities, who make up about 14 million (30 percent) of the workforce.
“The SME sector holds tremendous potential for Kenya’s socio-economic transformation, comprising approximately 98 percent of all businesses and creating a significant number of jobs. FSD Africa is thrilled to launch this innovative fund dedicated to supporting small and medium enterprises in Kenya. This fund will provide affordable credit to businesses that have, historically, faced challenges in accessing financing. Moreover, the fund will offer MSMEs a route to growth across borders and support in local employment rates and the growth of the Kenyan economy,” said Mark Napier, CEO of FSD Africa.
