The British High Commission in Nairobi has announced a USD $5.2 million (KSH 667 million) fund aimed at supporting over 10,000 Micro, Small, and Medium Enterprises (MSMEs) in Kenya.
This initiative is part of the UK’s ongoing commitment to long-term investment solutions that drive growth and job creation in the country. The Listed SME Debt Fund, sponsored by FSD Africa, seeks to mobilize up to USD $300 million (KSH 38.85 billion) in sustainable finance to provide affordable credit to Kenyan businesses, supporting at least 50,000 households and creating or protecting over 89,000 jobs.
Targeting USD $240 million from domestic institutional investors and the remainder from foreign investors, the fund is designed to cater to a diverse range of sectors, thereby lowering borrowing costs for Kenyan entrepreneurs. Managed and listed in Kenya, the fund aims to present an attractive investment opportunity for local investors by de-risking their investments in MSMEs while offering promising returns.
Currently, SMEs in Kenya face interest rates as high as 40%, making it difficult for them to grow and generate employment. The fund will also encourage pension funds to invest in sectors that enhance the flow of goods, services, and labor in the Kenyan economy.
British High Commissioner to Kenya, Neil Wigan, emphasized the necessity of reducing borrowing costs 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.”
The fund’s first close is targeting USD $100 million, and it offers Kenyan institutional investors, including pension funds, a new asset class to help diversify and stabilize their portfolios. This aligns with FSD Africa’s mission to deepen and diversify capital markets through innovative solutions.
Mark Napier, CEO of FSD Africa, highlighted the significance of the SME sector in Kenya’s economy, 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 mobilizes finance from local pension funds and channels it to SMEs through direct and intermediated structures, such as micro-finance institutions and digital lenders. This approach not only directly impacts businesses that receive funding but also promotes market systems change by encouraging pension funds to invest in Kenya’s real economy sectors, complementing other UK programs that support businesses benefiting from the fund.
About FSD Africa
FSD Africa, a specialist development agency established in 2012 by the UK Government, works to make finance work for Africa’s future. With operations in over 30 African countries, FSD Africa focuses on mobilizing “green plus” finance that powers economic and social development while delivering environmental gains. The agency addresses systemic challenges in Africa’s financial markets, strengthens financial infrastructure, and promotes policy and regulatory reform to foster large-scale, long-term change.
For more information, visit: [FSD Africa](www.fsdafrica.org).
