The European Investment Bank (EIB) has joined forces with the Central Bank of Kenya (CBK) to enhance climate finance in Kenya significantly. This new collaboration aims to empower Kenyan financial institutions in their journey towards a greener economy.
The initiative, part of the EIB’s Greening Financial Systems Programme and funded by the German government through the International Climate Initiative Fund (IKI Fund), marks the first of its kind in East Africa. It’s designed to mobilize climate finance by addressing the challenges commercial banks face in this sector. This includes incorporating climate risk into Kenya’s regulatory framework and developing a green taxonomy for the financial sector, aligning investments with the goals of the 2015 Paris Climate Agreement.
Thomas Östros, Vice President of the EIB, stressed the importance of overcoming barriers to green financing in Kenya. He highlighted the need for scaling up climate finance to boost green transition and mitigate the impacts of climate change. This technical best practice partnership with CBK continues EIB’s long-standing efforts to enhance the impact of climate finance in Kenya.
Dr. Kamau Thugge, Governor of the Central Bank of Kenya, emphasized CBK’s commitment to greening the Kenyan financial sector. He referred to the Guidance on Climate-Related Risk Management issued in October 2021 as a significant step in this direction. While considerable progress has been made, Dr. Thugge acknowledged the need for further advancements.
The EIB’s Finance in Africa Report 2023 indicates a growing focus on climate risks in financial institutions’ risk appraisal processes. A recent EIB survey revealed that 59% of African banks have a climate change strategy, with another 22% planning to introduce one. This shift is not just about risk mitigation but also about offering an expanded range of green finance products.
The partnership responds to the urgent call for climate finance mobilization at COP 28 in Dubai. It aims to limit global temperature increases and adapt to the impacts of climate change. Over the past decade, the EIB, the world’s largest international public bank and leading climate financier, has been instrumental in building climate finance technical skills among African financial professionals. It has also injected significant investment into the Kenyan private sector, fostering growth and resilience.
This collaboration between EIB and CBK is set to be a game-changer in Kenya’s journey towards sustainable financial practices and a greener future.