THE African Development Bank (AfDB) has greenlit an equity investment of €18 million in the Africa Guarantee Fund (AGF) and an additional €1.2 million to bolster youth and women entrepreneurs involved in agricultural value chains in Kenya. The European Union (EU) provided the funding, underscoring the ongoing partnership between the EU and the African Development Bank Group.
Nnenna Nwabufo, the Director General for East Africa at the Bank, hailed the approval as ‘another milestone in the implementation of the partnership with the EU, which also signals the importance given to the role of women and youth in the agricultural sector in Kenya.’
The financing comes at a crucial time as the demand for Micro, Small, and Medium Enterprises (MSME) financing remains largely unmet in Kenya, further exacerbated by the disruptions caused by the Covid-19 pandemic. The International Finance Corporation estimates that the
re is an SME finance gap of $19.38bn, equivalent to 30 percent of Kenya’s GDP.
The World Bank’s Covid-19 Business Pulse Survey reveals that many potentially viable firms are still struggling. The agriculture sector, which employs a significant portion of the population, particularly in rural areas, accounts for 60 percent of Kenya’s exports. However, data from the Kenya Youth Agribusiness Strategy 2017-2022 shows that 64 percent of unemployed Kenyans are youth between the ages of 18 and 35, with many leaving the agricultural sector to pursue opportunities in non-agricultural industries in urban centres
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Women entrepreneurs face numerous obstacles that hinder their access to finance and the growth of their businesses. These challenges include a lack of business management skills, legal and social barriers, policy constraints, limited access to networks and information, and inadequate financing options tailored to their specific needs.
Financial institutions often perceive women-led businesses as high-risk due to the scarcity of quality assets for collateral and smaller business sizes. Therefore, supporting women entrepreneurs and mobilising private investment in this segment are vital measures to foster inclusive economic growth in Kenya.
The 2017 Economic Survey by the Kenya National Bureau of Statistics highlights that commercial bank lending to the sector was a mere three percent in 2016, primarily due to the perceived high-risk nature of this customer segment.
