Coop and UN-backed facility unveil financing solution for digital enterprises

Co-operative Bank of Kenya, in partnership with the United Nations Capital Development Fund (UNCDF), has introduced a suite of financing solutions to expand access to capital for technology-driven enterprises in Kenya.

The solutions have been developed under the $900,000 (Sh116 million) Loan Portfolio Guarantee Facility, signed between UNCDF and Co-operative Bank of Kenya and announced earlier this year.

It forms part of the broader Digital Platforms Kenya (DigiKen) Programme, a United Nations initiative funded by the European Union (EU) through the Joint SDG Fund, which supports Kenya’s digital transformation agenda.

Under this arrangement, UNCDF shares a portion of the lending risk with the bank, enabling the bank to extend financing to digital and digitally enabled businesses that may not otherwise meet conventional lending requirements.

Through these financing solutions, Co-operative Bank of Kenya is translating UNCDF’s guarantee support into practical financing opportunities for digital enterprises seeking capital to grow, innovate and create jobs.

The financing solutions, managed by the bank, are designed to address a critical financing gap for many digital and digitally enabled businesses that struggle to secure commercial loans due to limited collateral, evolving business models and short operating histories.

By reducing risk for Co-operative Bank, the partnership aims to unlock new investment and serves as a primary vehicle for achieving DigiKen’s target of enabling 150 Kenyan Micro, Small, and Medium-sized Enterprises (MSMEs) to secure funding.

Ultimately, this mobilised capital is projected to generate 4,500 direct jobs and 20,000 indirect jobs in Kenya’s digital economy, directly advancing the Government of Kenya’s Digital Superhighway Agenda.

Principal Secretary, State Department for Information, Communication, Technology and Digital Economy John Tanui welcomed the initiative, saying it is an important contribution to Kenya's digital transformation agenda.

 “A thriving digital economy depends not only on innovation, but also on access to capital. By de-risking lending and improving access to finance for homegrown digital platforms, especially those led by women and youth, we are helping entrepreneurs and MSMEs turn ideas into businesses, strengthen local innovation and accelerate the growth of Kenya’s Tech Sector and the Digital Superhighway Agenda,” said Tanui.

Supported by UNCDF’s guarantee facility, these financing solutions are designed to catalyse additional lending for qualifying businesses through Co-operative Bank of Kenya.

The facility provides guarantee coverage of between 50 and 70 per cent of loans extended through the financing solutions, with enhanced coverage of up to 70 per cent available for enterprises operating in Kenya's Arid and Semi-Arid Lands (ASALs).

This enables the bank to extend financing to businesses that may otherwise struggle to meet conventional lending requirements, while supporting greater access to finance in underserved regions.

 “Many promising businesses struggle to access financing, not because they lack potential, but because they do not fit traditional lending models. Through this partnership, we are derisking Co-operative Bank of Kenya, so it has the confidence to back entrepreneurs who can drive innovation, growth and job creation and access the capital they need to thrive,” said Omon Ukpoma-Olaiya, Regional Investment Team Lead for East and Southern Africa and the Arab States Region, UNCDF.

The financing solutions are designed to support working capital, business expansion, and technology investments across key segments of Kenya's digital economy, including fintech companies, digital credit providers, e-commerce and digitally enabled MSMEs, and digital innovation hubs and ecosystem enablers.

Co-operative Bank Group Chief Executive Gideon Muriuki said the partnership highlights the bank's commitment to supporting enterprise growth.

“Kenya's digital economy is creating exciting opportunities for businesses of all sizes, yet many entrepreneurs still struggle to access the financing needed to turn ambition into growth. Through this partnership, we are providing practical financing solutions that will help innovative businesses invest, expand and create jobs while strengthening Kenya's competitiveness in the digital age,” said Muriuki.

The financing solutions are an example of how the DigiKen programme, implemented by UNESCO (Lead Agency), UNCDF, UN Women, and UNEP, in close coordination with the UN Resident Coordinator’s Office and in partnership with the Ministry of Information, Communications and the Digital Economy (MoICDE), is bringing together government, development partners and the private sector to address barriers to digital transformation and economic opportunity in Kenya.

Dr Garry Conille, United Nations Resident Coordinator in Kenya, emphasised the importance of improving access to finance for entrepreneurs, highlighting the collective vision behind the milestone.

 “For the United Nations, the value of this partnership is about widening who can participate in Kenya’s digital economy. We need to find practical ways to bring opportunity closer to young people, women and entrepreneurs in underserved communities who too often remain outside traditional pathways to finance.

 DigiKen shows the value the UN can bring by connecting Government, finance and development partners around solutions that turn talent and ideas into viable businesses, jobs and livelihoods,” said Dr Garry.

Over the coming months, Co-operative Bank, UNCDF, and their DigiKen partners will launch targeted outreach and capacity-building campaigns across Kenya's regional digital innovation hubs.

By working closely with local entrepreneurs, tech hubs, and industry stakeholders to drive awareness and rapid uptake of the financing solutions, the partnership aims to translate this increased access to finance into immediate, real-world digital growth and economic opportunity.