Alliance to Catalyse Climate Finance Initiatives in Kenya

European Investment Bank and Central Bank of Kenya Unveil Climate Finance Initiative for Net Zero Economy

The European Investment Bank (EIB) and the Central Bank of Kenya (CBK) today launched a new climate finance best practice initiative. This initiative aims to strengthen engagement by Kenyan financial institutions to finance climate related investment, enable commercial banks to mobilise finance essential to achieving a net zero economy and strengthen the climate resilience of the Kenyan financial systems.

The Greening Financial Systems Programme

The two-year technical assistance scheme is the first of its kind to be implemented in East Africa under the EIB’s Greening Financial Systems Programme. The programme is funded by the International Climate Initiative (IKI) on behalf of the German Federal Ministry of Economic Affairs and Climate Action (BMWK). It is part of BMWK’s and EIB’s joint contribution to the work of the NDC Partnership specifically, the “Readiness support for greening central banks” initiative.

The initiative will serve as a model for mobilising climate finance by tackling barriers that hold back engagement by commercial banks and will enable the CBK to incorporate climate risk into the Kenyan regulatory framework. The scheme will also assist to further increase the impact of climate related investment by developing the green taxonomy for the financial sector that supports scaling up green investment aligned with the goals of the 2015 Paris Climate Agreement.

The programme reflects the urgent need to mobilise climate finance outlined this past week at the COP 28 in Dubai and contributes to global efforts to limit global temperature increases and adapt to the impact of climate change. It will therefore also assist Kenyan banks and financial institutions to better embrace climate finance best practice across all activities, catalyse new funding for green projects, and better assess, monitor, and report on the climate related risks.

EIB and CBK Forge Climate Finance Partnership 

Aiming to address challenges highlighted at COP 28, EIB Vice President Thomas Östros emphasized the crucial need to scale up climate finance. Recognizing barriers such as the lack of long-term funding, perceived risks, and limited experience in climate finance, Östros highlighted the new technical best practice partnership.

This collaboration builds on EIB's longstanding relationship with Kenyan financial institutions, aiming to enhance the impact of climate finance and unlock investments for better climate change resilience. Central Bank of Kenya Governor, Dr. Kamau Thugge, underscored the commitment to greening the Kenyan financial sector and highlighted progress made following the issuance of guidance on climate-related risk management in October 2021."

As outlined in the EIB’s Finance in Africa Report 2023, the increasing prevalence of climate risks on balance sheets has made climate an important part of the risk appraisal process for both new loans and existing portfolios. The latest EIB survey found that 59% of banks in Africa have a climate change strategy and a further 22% plan to introduce one. Banks across Africa are now stepping up their efforts to offer an expanded range of green finance products rather than just mitigating risk.

Over the last decade, the EIB has helped to strengthen climate finance technical skills of more than 40,000 African financial professionals. Additionally, it has provided more than EUR 534 million (Ksh 88 billion) over the last five years for private sector investment across Kenya in partnership with businesses, banks, financial partners and microfinance institutions.

Click here for EIB press release 

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