Kenyan MSMEs in renewable energy to benefit from Sh500m Swedish investment

Africa Enterprise Challenge Fund Chief Executive Officer Victoria Sabula, Director of Renewable Energy Ministry of Energy and Petroleum Eng Dan Marangu and Embassy of Sweden in Kenya Head of Development Cooperation Marie Ottosson as they launched 4 year, 2nd Renewable Energy and Climate Technologies Kenya programme at a Nairobi hotel, on March 11, 2025. [Jenipher Wachie, Standard]

Kenyan micro, small and medium enterprises (MSMEs) in the renewable energy sector are set to benefit from Sh500 million in funding from the Swedish government.

Speaking during the launch of the second Renewable Energy and Climate Technologies Kenya programme (REACT) in Nairobi, the Swedish Embassy in Kenya—led by the Head of Development Cooperation, Marie Ottosson—highlighted that the Energy for Green Growth programme aims to invest in innovative business ideas such as the circular economy and the productive use of energy.

The Africa Enterprise Challenge Fund (AECF), in partnership with the Swedish International Development Cooperation Agency (SIDA), officially launched the REACT Kenya Programme, which focuses on transforming Kenya’s energy sector through interventions in energy access for underserved regions, productive use of energy, e-mobility, circular economy initiatives, and green transition technologies.

“REACT aligns perfectly with Sweden’s development priorities, including poverty reduction, environmental sustainability, and economic empowerment. We have seen that private sector engagement is important, especially when it comes to the deployment of innovative and scalable solutions,” said Ottosson.

AECF Chief Executive Officer Victoria Sabula, who also spoke at the event, emphasised their commitment to helping Kenya achieve 100 per cent access to energy.

According to government statistics, only 30 per cent of households in Kenya have access to clean cooking energy. This means the majority of Kenyans still rely on traditional cooking methods and wood fuel, which contributes to deforestation.

“How do we solve this in a way that does not further destroy the planet that we all care for—or must care for?” asked Sabula. “Only 30 per cent of households in Kenya are accessing clean cooking solutions. It means that many of our households are exposed to smoke from wood fuel, and so many of our women and children are suffering health challenges as a result. Additionally, we continue to destroy the forests we need to conserve to protect the environment.”

In the 2024/25 financial year, the Kenyan government allocated Sh2.7 billion to climate action, focusing on both mitigation and adaptation efforts. The funding aims to support locally led climate resilience initiatives and strengthen both county and national governments’ capacity to manage climate risks.

Sabula also called for support for private sector companies developing clean energy solutions, many of which are struggling to access commercial funding due to high risk.

“This initiative is really about bringing the private sector on board and supporting them to scale their innovations. Beyond that, this same private sector will be able to unlock the commercial capital that is already available—but inaccessible due to the risk profile of the country, the sector, and even the business models,” she said.

The announcement comes amid growing pressure on banks to be more conscious of their environmental and social impact.