By Faridat Salifu
The European Investment Bank (EIB) and the Central Bank of Kenya (CBK) have partnered to launch a cutting-edge climate finance initiative.
Backed by the German government through the International Climate Initiative Fund, the programme, which has a two-year life span falls under the EIB’s Greening Financial Systems scheme. It seeks to empower Kenyan financial institutions to lead the charge in climate-related investments, thus fostering a net-zero economy and reinforcing climate resilience within Kenya’s financial systems.
Reports say the scheme, which is the first of its kind in East Africa, is poised to serve as a blueprint for breaking down barriers obstructing commercial banks’ participation in climate finance, while also aiding the Central Bank of Kenya in assimilating climate risk into the Kenyan regulatory framework.
A core component of the program’s objectives involves the development of a green taxonomy for the financial sector and the facilitation of heightened investment aligning with the goals of the Paris Climate Agreement.
The Greening Financial Systems initiative is set to revolutionize climate finance best practices across Kenyan banks and financial institutions.
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Its goals include igniting fresh investments in green projects, enhancing the evaluation, monitoring, and reporting of climate-related risks, and contributing to the global initiatives outlined at COP28 in Dubai to combat climate change and adapt to its impact.
Highlighting the significance of comprehending the obstacles thwarting green financing in Kenya, EIB Vice-President Thomas Östros underscored the imperative need to scale up climate finance.
He emphasized that the technical best practice partnership with the Central Bank of Kenya builds upon the EIB’s longstanding collaboration with Kenyan financial institutions.
Echoing this sentiment, Governor of the Central Bank of Kenya, Dr. Kamau Thugge, reaffirmed the commitment to fostering a green financial sector.
He acknowledged the issuance of guidance on climate-related risk management in 2021 and credited banks for the progress made in implementing the guidance, while emphasizing the need for sustained efforts.
Over the past decade, the EIB, as the world’s largest international public bank and a prominent climate financier, has been instrumental in enhancing the climate finance expertise of over 40,000 African financial professionals.
In the last five years, it has channeled over €534 million (KES 88 billion) towards private sector investment in Kenya, collaborating closely with local businesses, banks, financial partners, and microfinance institutions.
