Kenyan banks are anticipating a competitive race to become the distributors of a substantial Sh50 billion green investment fund.

This initiative, backed by the World Bank, aims to bolster Small and Medium Enterprises (SMEs) venturing into climate change mitigation projects.

The World Bank, in a technical design detail note for the Kenya Jobs and Economic Transformation Project, revealed that Kenya's State Department of Investment Promotion (SDIP) will act as the anchor investor.

The SDIP, operating under the Ministry of Investment, Trade and Industry, will utilize the Kenya Development Corporation (KDC) to channel seed capital into the Green Investment Fund (GIF).

This seed capital will take the form of a mezzanine loan, a financial instrument combining aspects of debt and equity.

The World Bank report further highlights that the GIF seeks to attract additional funding from the private sector.

These mobilized funds will then be directed towards endeavours promoting environmental sustainability, including electric vehicle (EV) manufacturing, the construction of greenhouses, water and sanitation solutions, and advancements in smart agriculture.

"The SDIP – MITI through KDC will serve as the anchor investor by providing junior/mezzanine debt into the Green Investment Fund with provisions for it to take on first losses and to cap its returns," the Worl Bank stated.

The Green Fund will operate as a special-purpose vehicle, ensuring the efficient allocation of the World Bank loan proceeds.

Regulatory oversight will be provided by the Capital Markets Authority, while an independent and competitively chosen fund manager will steer the fund's operations.

The initial focus of the GIF is anticipated to be electric vehicles, with the World Bank estimating a potential funding requirement of $211 million (Sh27.4 billion).

This capital injection will target various aspects of the EV industry, including manufacturing, charging infrastructure development, battery technology advancements, and retrofitting existing vehicles for electric power.

This significant green investment fund presents a promising opportunity for Kenyan SMEs engaged in climate-conscious endeavours.

The forthcoming competition among banks to disburse these funds signifies the growing recognition of the financial viability and positive environmental impact of such initiatives.