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How UK plans to support 50,000 households, over 89,000 jobs in Kenya
How UK plans to support 50,000 households, over 89,000 jobs in Kenya
By: Nii Ammui Fio | 3 mins read
The British High Commission in Nairobi has launched a USD $5.2 million (KSH 667 million) fund to bolster Kenya’s Micro, Small, and Medium Enterprises (MSMEs), part of a wider UK strategy to create jobs and promote economic growth through long-term investment in Kenya.
The initiative, known as the Listed SME Debt Fund, is sponsored by FSD Africa and aims to raise up to USD $300 million (KSH 38.85 billion) in sustainable financing to provide affordable credit for MSMEs.
With this fund, the UK intends to support 50,000 households and protect or create over 89,000 jobs, significantly improving access to basic services for more than 200,000 Kenyans.
The Listed SME Debt Fund targets USD $240 million from domestic investors, primarily through local pension funds, with the remaining balance from foreign investors. It is expected to serve a broad spectrum of sectors, from agriculture to finance, and aims to reduce borrowing costs for Kenyan business owners.
Managed locally, the fund will offer an appealing investment opportunity for Kenyan investors by de-risking investments in MSMEs while still delivering attractive returns.
Currently, SMEs in Kenya are often burdened by interest rates as high as 40%, which limits their ability to expand and create jobs. The fund also encourages Kenyan pension funds to invest in sectors that facilitate the flow of goods, services, and labor within the country.
High Commissioner to Kenya, Neil Wigan, speaking at FSD Africa's Sustainable Capital Markets Conference, Tuesday 5 November 2024.
The first close of the fund targets USD $100 million and offers a new asset class for pension funds, aligning with FSD Africa’s mission to diversify and deepen local capital markets.
British High Commissioner to Kenya, Neil Wigan, expressed the importance of making credit affordable for Kenyans, stating, “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.”
In addition to financial support, the Listed SME Debt Fund will encourage market system changes by mobilizing pension funds to invest in Kenya’s real economy sectors, benefiting local employment rates and Kenya’s economic growth overall.
Mark Napier, CEO of FSD Africa, remarked on the impact of SMEs in Kenya, saying, “The SME sector holds tremendous potential for Kenya’s socio-economic transformation, comprising approximately 98% 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 which 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.”
The UK-Kenya strategic partnership joint statement can be found here.
How the Listed SME Debt Fund Operates
The Listed SME Debt Fund works by mobilizing finance from local pension funds and directing it to SMEs through direct and intermediated channels, such as micro-finance institutions and digital lenders. This setup enables direct support to businesses receiving financing and fosters a shift in market systems by promoting pension fund investments in Kenya’s real economy.
About FSD Africa
Founded in 2012 by the UK Government, FSD Africa is a development agency focused on transforming finance to drive Africa’s sustainable future. Operating across over 30 African nations, FSD Africa specializes in mobilizing “green plus” finance to support economic, social, and environmental advancements across the continent. Through policy reform, regulatory strengthening, and infrastructure improvements, FSD Africa is committed to driving long-term change in Africa’s financial markets.
For more information, visit: FSD Africa.
