Information to Financial Institutions Interested to Implement the Green
Financing Facility (GFF) of the Rural Kenya Financial Inclusion Facility (RK
FINFA) Project
Introduction
The Government of Kenya and the International Fund for Agriculture Development
(IFAD) are financing a six-year (2022-2028) development project the Rural Kenya
Financial Inclusion Facility (RK-FINFA). The project supports the transformation of
rural and smallholder agriculture sector through private sector-led development by
improving the access of the smallholder farmers and rural micro, small and medium
sized enterprises to appropriate financial services. The project goal is “poverty
reduction, climate change adaptation and improved livelihoods in rural areas”.
The Green Financing Facility of the RK FINFA Project is established as a permanent
investment mechanism and is managed by the Agricultural Finance Corporation (AFC).
This facility is intended to (i) alleviate the liquidity constraints of Savings and Credit
Cooperative Societies (SACCOS) and Micro-Finance Banks / Institutions (MFBs/MFIs)
which are the main financial service providers for smallholders and rural micro
enterprises. It is also to encourage small scale farmers and rural MSMEs to invest in
climate smart and environmentally friendly activities.
Eligible financial institutions will sign a loan agreement with AFC, and use the funds
to on-lend to eligible end borrowers.
The intended end borrowers of the GFF funds are smallholder farmers and rural
MSMEs based in rural areas or in urban areas but providing services to rural
populations that participated in the IFAD supported value chain projects within
fourteen counties in Kenya. The Counties are Machakos, Embu, Meru, Tharaka Nithi,
Nyeri, Kirinyaga, Nakuru, Kisii, Nandi, Kakamega, Siaya, Busia, Bungoma and Trans
Nzoia. The IFAD Projects are: Kenya Livestock Commercialisation Project (KeLCOP),
Aquaculture Business Development Programme (ABDP), Kenya Cereal Enhancement
Programme Climate Resilient Agricultural Livelihoods Window (KCEP CRAL),
Smallholder Dairy Commercialisation Projects (SDCP) and Upper Tana Natural
Resources Management Project (UTaNRMP).
Eligible activities for financing by GFF funds are those that can address climate
adaptation and mitigation. These include sustainable farming practices, renewable
energy, climate smart agriculture, natural resource conservation, biodiversity
conservation, and pollution prevention and control. RK FINFA project will provide
green finance taxonomy that offers a classification system for identifying activities and
investments that will determine eligibility under the GFF. It will help financial actors
and others determine which investments can be labelled “green” for their jurisdictions,
and to report on the GFF. The project may also provide the financial institutions with technical assistance to develop and deploy appropriate green finance products for the
rural agricultural sector.
Eligible financial institutions for GFF financing must be compliant with the relevant
regulatory requirement and able to provide sufficient collateral to secure the wholesale
loan facility. They should have, or be willing to develop rural finance products
appropriately priced for farmers, pastoralists, and micro, small and medium
enterprises. They should also have sufficient rural branch network and proven demand
for financial services from rural clientele, including from IFAD value chain projects.
The wholesale borrower should be able to leverage the loans by 25% and be willing
to enhance their environmental, social and governance (ESG) systems. At least 50%
of the loans should go to females and 30% to youth borrowers. Ability to provide loans
at more client-friendly terms including longer loan duration, appropriate grace periods,
cash flow based repayment schedules, affordable collateral and competitive interest
rates is highly desirable. For the first year, at least 50% of the loan disbursements
should be for green financing, and 100% from year 2 onwards.
The Agricultural Finance Corporation (AFC) is requesting for proposals from Wholesale
borrowers of the GFF fund for on-lending to smallholder farmers and MSMEs in rural
Kenya. The eligible wholesale borrowers are SASRA regulated SACCOs, Microfinance
Banks (MFBs) regulated by Central Bank of Kenya (CBK) and Microfinance Institutions
(MFIs) registered under Digital Credit Providers (DCP) by CBK. No single Wholesale
borrower can borrow more that 20% of the available GFF capital of Kshs.
1,080,000,000. Therefore, the maximum amount of wholesale loan to individual
financial institution is Kenya shillings two hundred and sixteen million (Kshs.
216,000,000) subject to availability of funds the number of beneficiaries to be reached
by the financial institution. Kindly note that the application is an on-going
process until further notice.
For more information, please contact the following:
Name: Christopher Kiburu
Email Address : ckkiburu@agrifinance.org
contact: 0722 217 836
Name: Sidney Bukeke
Email Address : sbukeke@agrifinance.org
contact: 0753 801 132
