Absa Bank Kenya will provide loans of between $500,000 and $2 million to agricultural businesses investing in cold-storage infrastructure under a new financing arrangement with the United Nations Capital Development Fund (UNCDF) and the United Nations Development Programme (UNDP).
The financing will target agricultural aggregators, equipment suppliers, exporters and other large businesses seeking to deploy solar-powered cold-storage systems across Kenya’s horticulture, dairy, fisheries and meat value chains.
UNCDF will provide a portfolio guarantee to share lending risks with Absa and help the bank extend credit to a sector that has faced high upfront costs and limited access to commercial financing.
The partnership is intended to help address an estimated $2.1 billion gap in Kenya’s cold-storage infrastructure, as the country seeks to reduce losses of agricultural produce caused by inadequate post-harvest handling and storage.
The loans will be structured as asset-based financing, with the solar-powered cold-storage equipment serving as collateral alongside the UNCDF guarantee.
Kenya loses about 40% of its agricultural produce annually because of inadequate post-harvest handling and storage, according to estimates cited by the partners. Agriculture contributes about a quarter of the country’s gross domestic product and employs more than 40% of the population, according to the Kenya National Bureau of Statistics.
The financing programme is part of the second phase of a cold-chain initiative being implemented by UNCDF and UNDP with support from the Mitigation Action Facility.
The first phase demonstrated demand for solar-powered cold storage and had the potential to reach more than 60,000 farmers and create about 1,200 jobs, the organisations said.
“Through this partnership with UNCDF and UNDP, we are unlocking innovative financing that empowers agribusinesses to invest in cold storage infrastructure,” Renato D’Souza, business banking director at Absa Bank Kenya, said.
UNCDF said its guarantee would reduce the risks for financial institutions and help attract private capital to Kenya’s cold-chain sector.
Demand for cold storage is expected to increase through 2030, creating opportunities for investment in refrigerated infrastructure, the agency said.
The programme will also support the deployment of solar-powered equipment in rural areas, where unreliable electricity supplies can constrain cold-storage capacity.
