Kenya: African Development Bank Group Board approves funds to support women and youth in agribusiness | African Development Bank

The Board of Directors of the African Development Bank Group has approved a capital investment of €18 million into the Africa Guarantee Fund (AGF) and an additional €1.2 million to support young and female entrepreneurs engaged in agricultural value chains in Kenya.

The funding, approved on June 6, 2023, was provided by the European Union (EU) under its partnership with the African Development Bank Group.

Ms. Nnenna Nwabufo, the director general of the banking group for East Africa, called the approval “another milestone in the implementation of the partnership with the EU, which also indicates the importance of the role of women and youth in Kenya’s agricultural sector it.”

The demand for micro, small and medium-sized enterprise (MSME) finance remains unmet in Kenya and has been exacerbated by the disruptions of the Covid-19 pandemic. The International Finance Corporation (IFC) estimates the SME financing gap at $19.38 billion, representing 30 percent of the country’s GDP.

that of the World Bank Covid-19 Business Pulse Survey (BPS) shows that many potentially viable companies are still struggling. The agricultural sector employs the majority of the population, especially in rural areas, and accounts for 60 percent of Kenya’s exports. According to data from the 2017-2022 Kenya Youth Agribusiness Strategy, 64 percent of unemployed Kenyans are young people (18 to 35 years old), with the majority moving away from agriculture to fast-growing non-agricultural sectors in urban areas.

Women face many restrictions that hinder their access to finance and the growth of their businesses. These include a lack of business management skills, legal, social and policy barriers, poor access to networks and information and inadequate funding opportunities to meet their specific needs.

Banks often view women-led businesses as risky due to the low quality or number of assets collateralized and generally smaller company size. Therefore, supporting women entrepreneurs and boosting private investment in this segment are crucial measures to promote inclusive economic growth in Kenya.

According to the 2017 Economic survey according to the Kenya National Bureau of Statistics, commercial bank lending to the sector was only three percent in 2016 as the risk level of this customer segment is considered high.

About fresh produce

AGF is a pan-African limited liability non-banking financial institution headquartered in Nairobi, Kenya. The aim is to improve SMEs’ access to finance and capacity development, thereby increasing employment and reducing poverty.

The total share capital is $225 million, with investments from the German state investment and development bank KfW (28.74 percent); Danish Investment Fund for Developing Countries and DANIDA) (33.52 percent); Spanish Ministry of Foreign Affairs and Cooperation (9.31 percent); African Development Bank (9.3 percent); Nordic Development Fund (7.96 percent); French development agency, AFD (6.51 percent); and Proparco (4.65 percent).

Since its inception, AGF has issued a cumulative $1.56 billion in guarantees to 189 Partner Financial Institutions (PFIs) in 40 African countries.