Kenya’s ambition to raise Ksh 7.3 trillion for climate-related investments over five years will require significant changes in how banks assess projects, manage lending risks and distribute credit to businesses.

The country’s banking sector is now being challenged to develop financing models that can support investments in renewable energy, agriculture, clean transport and other environmentally sustainable projects while ensuring that borrowers can repay their loans.

The challenge comes as the Kenya Bankers Association (KBA) unveiled the Banking Industry Sustainable Finance Roadmap 2027–2037 in Nairobi on Tuesday, November 3, 2026. The framework outlines measures banks can adopt to increase sustainable lending and direct more private capital towards projects supporting Kenya’s economic and environmental priorities.

The scale of the financing requirement is outlined in Kenya’s Nationally Determined Contribution (NDC) 3.0, which estimates that the country will need approximately $56 billion between 2031 and 2035 to meet its climate commitments.

This translates to an average of $11.2 billion annually. Domestic sources are expected to contribute 19 per cent of the annual requirement, equivalent to approximately $2.1 billion, with the remaining funds expected from international support and carbon markets.

The figures place financial institutions at the centre of Kenya’s climate financing plans. According to KBA, banks control more than 90 per cent of the financial sector’s assets, giving them a significant role in directing capital towards sustainable investments.

However, the availability of money alone will not guarantee that climate projects receive financing.

The roadmap identifies several obstacles that make lenders reluctant to support sustainable investments. These include inadequate feasibility studies, insufficient information about borrowers, limited collateral, unpredictable project revenues and the high cost of preparing projects before they can attract investors.

Banks also face uncertainty surrounding project performance, technology, changing weather conditions and implementation. Such risks make it difficult for lenders to determine whether an investment will generate sufficient returns to repay borrowed money.

Traditional lending arrangements also present challenges because some green projects require longer repayment periods and different financing structures from conventional commercial loans.

To address these concerns, the roadmap proposes establishing a pipeline of properly prepared projects that can meet lenders’ requirements. It also recommends development finance institution-backed guarantees and blended financing facilities to reduce investment risks and encourage private investors to participate.

A proposed project preparation facility would help identify priority investments, finance preliminary feasibility studies, and connect viable projects with potential investors.

Agriculture and small businesses are among the sectors targeted for expanded financing.

For agriculture, the framework proposes working with cooperatives and established buyers to support farmers seeking credit. Seasonal repayment arrangements, agricultural insurance and technical assistance would help lenders manage risks associated with farming activities and unpredictable weather patterns.

Standardised loans

Micro, small and medium-sized enterprises (MSMEs) could also benefit from standardised loans targeting solar installations, energy-efficient equipment, clean cooking solutions and productive machinery.

Speaking during the launch, KBA chairman and KCB Group chief executive Paul Russo said the industry needed to move beyond sustainability commitments and focus on practical implementation.

He said Kenya had investment opportunities in renewable energy, agriculture, transport, infrastructure and MSMEs, but these opportunities needed proper preparation before attracting financing.

KBA chief executive Raimond Molenje said the roadmap would help financial institutions integrate sustainability into governance, risk management, reporting and capital allocation.

He noted that the banking industry had achieved an 83 per cent compliance rate with climate-related risk disclosure requirements. However, banks needed to use the information collected to guide lending decisions and manage their investment portfolios.

The framework also proposes a shared market intelligence system that would collect anonymised information on financing volumes, lending prices, portfolio performance and realised environmental impact.

Implementation is expected to begin in 2027, with the foundation phase running until 2032, followed by expansion and consolidation towards 2037.

The roadmap was developed by KBA through its Centre for Sustainable Finance and Enterprise Development in partnership with the International Finance Corporation and WWF-Kenya.

Environment Principal Secretary Festus Ng’eno said environmental protection should form part of the country’s economic planning, calling for stronger cooperation between government, banks, investors and development partners.