A groundbreaking London-backed debt fund has been launched to boost access to finance for Kenya’s small and medium-sized enterprises (SMEs). With a goal of mobilising up to $300 million, the initiative aims to reduce prohibitive borrowing costs, which can reach as high as 40%, hindering the growth of these vital economic drivers.
Announced by the British High Commission in Nairobi on 5 November, the fund is part of the UK’s broader commitment to strengthening Kenya’s economic fabric and fostering inclusive growth.
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In collaboration with FSD Africa, a development finance institution backed by the UK government, the British High Commission has allocated KSH 667 million ($5.2 million) to establish the debt fund. Neil Wigan, the British High Commissioner to Kenya, highlighted the initiative’s focus on supporting women, young people, and people with disabilities. By providing SMEs with affordable financing options, the programme is expected to drive job creation and stimulate long-term economic growth.
The fund is structured to attract both local and international investors, including Kenyan pension funds, which collectively manage over $30 billion in assets. Aiming to raise $240 million from Kenyan institutions and $60 million from foreign investors, the fund represents a unique investment opportunity in alternative assets for pension funds. This strategy not only diversifies investment portfolios but also stimulates Kenya’s economy by facilitating access to credit for SMEs, which constitute 98% of the country’s businesses and employ a significant portion of the workforce.
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With a first funding round of $100 million already in the pipeline, the programme is set to support 10,000 SMEs across various sectors such as agriculture, manufacturing, and technology. Its anticipated impact extends to 50,000 households and the creation of approximately 90,000 jobs, making it a transformative initiative for Kenya’s socio-economic landscape.
In addition to addressing high borrowing costs, the fund aligns with Kenya’s development priorities by empowering SMEs to expand operations and contribute to economic resilience. Reduced financing barriers enable businesses to invest in growth, innovate, and enhance productivity, benefiting the wider economy. The focus on inclusivity further ensures that marginalised groups have access to opportunities, fostering equitable economic participation.
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The London-backed debt fund represents a significant step in the UK’s financial collaboration with Kenya. By combining institutional investment with targeted financial support for SMEs, this initiative underscores the importance of international partnerships in driving sustainable development and economic empowerment. As the fund unfolds, it promises to unlock the potential of Kenya’s SMEs and catalyse a new era of economic growth.
