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Investing in Sub-Saharan Africa's Fastest Growing Economy

Kenya is one of the fastest growing economies in Sub-Saharan Africa with a youthful population, highly skilled workforce, and a dynamic private sector. But to truly transform the lives of its people still living in poverty, Kenya needs to overcome low investment and low productivity in its economy.

Palladium has been awarded a five-year USAID contract to implement the Kenya Investment Mechanism, an investment platform that will mobilise hundreds of millions of dollars in financing to key sectors of Kenya’s economy – agriculture and clean energy – with a focus on small and medium-sized enterprises.

By partnering with players across Kenya’s financial ecosystem, our overall goal is to leave behind a financial system that can effectively channel capital into these two key sectors long after Palladium leaves.

Why Clean Energy? 

In Sub-Saharan Africa, Kenya has one of the most developed power sectors. It also has abundant renewable energy resources, specifically geothermal, wind, and solar; in fact Kenya is the 8th largest world producer of geothermal energy. Eliminating fossil fuels is one of the government’s goals, laid out in Kenya Vision 2030, the long-term blueprint to transform Kenya into an industrializing, middle-income, and globally competitive country. But Kenya’s energy infrastructure is aging, its procurement processes are opaque, and it lacks access to financing.

The Kenya Investment Mechanism will help tackle these challenges, as the clean energy sector is poised for exponential growth to meet the needs of Kenya’s electricity-hungry economy.

Why Agriculture? 

Agriculture is the country’s largest single economic sector, accounting for 25% of the country’s GDP and 50% of its exports. Over 75% of Kenyans make some part of their living in agriculture. Yet, Kenya’s agricultural productivity has been stagnating in recent years, and most of its farmers do not have adequate financial services to use the inputs and technologies needed to increase their production. More challenges have come with recent droughts, and only 20% of Kenyan land is even suitable for farming.

The Kenya Investment Mechanism will mobilise capital for the horticulture, dairy, and livestock industries, which will increase agricultural productivity, grow farmers’ incomes, and improve food security.

Transforming Kenya's Financial Sector

The Kenya Investment Mechanism can help the country’s financial sector better match the demand and supply of capital. We’ll establish an Opportunities Team who can identify investable and credit-worthy opportunities and build a network of business advisors to support. These groups will match the needs of businesses with investors looking for opportunities. On the supply side, we’ll establish an Investment Team to help develop the capacity of Kenya’s financial institutions to lend and identify risk-mitigating strategies and tools for other potential strategic partners and investors. This team will have what it needs to make smart investments and serve as an example for others.

Over five years we’ll implement the Kenya Investment Mechanism for the agricultural and clean energy sectors, but will build the capacity of Kenyan network to ensure that the system can be scaled and replicated across other sectors in the future.