Kenya has taken a major step toward strengthening its digital economy with the launch of a financing mechanism aimed at unlocking capital for local digital platforms and startups. As part of this initiative, the United Nations Capital Development Fund (UNCDF) and the Co-operative Bank of Kenya have signed a $900,000 loan portfolio guarantee agreement under the Digital Platforms Kenya (DigiKen) programme. The Co-operative Bank will play a central role as the banking partner, expanding access to finance for MSMEs operating within Kenya’s growing digital platform ecosystem.
The agreement was formalized during a signing ceremony attended by representatives from the Government of Kenya, the European Union, the United Nations system, private sector stakeholders, and development partners.
Speaking at the event, UN Resident Coordinator Stephen Jackson described the mechanism as a transformative approach to addressing one of the biggest barriers facing startups—access to finance. “This is about reducing risk in order to unlock opportunity,” Jackson said.
“By sharing risk, we enable lending to businesses that would otherwise struggle to access capital, while maintaining strong financial discipline.”
He noted that the initiative is also intended to shift perceptions of the digital sector from high-risk to viable and long-term in potential.
EU Backs MSME Growth and Digital Innovation
Deputy Head of Mission, EU Delegation to Kenya, Ondřej Šimek, emphasized that the program will play a critical role in supporting MSMEs, particularly those developing digital platforms.
“Many innovative companies face challenges not because of a lack of demand, but because they cannot access the capital needed to grow,” he said. “This initiative will help unlock that growth while also contributing to job creation.”
Šimek added that the programme reflects a broader evolution in EU–Kenya cooperation, which is increasingly focused on digital transformation, private-sector development, and strategic infrastructure.
Director of Co-operatives Banking Division at Co-operative Bank of Kenya, Vincent Marangu, noted:
“This partnership allows us to extend financing to more businesses while upholding the strong governance and credit discipline that define Co-operative Bank. Our goal is to widen the circle of opportunity for enterprises that are ready to grow.”
Aligned with Kenya’s Digital Transformation Agenda
Delivering a keynote address, ICT Ministry Principal Secretary John Tanui underscored that the financing mechanism is fully aligned with the government’s Bottom-Up Economic Transformation Agenda (BETA), particularly its five key pillars.
He highlighted that digital transformation remains central to Kenya’s development strategy, guided by the national Digital Masterplan.
“We have made significant progress in building the foundations of a digital economy,” Tanui said.
According to Tanui, over 40,000 kilometers of fibre optic cable have been laid across the country to expand connectivity. The government’s eCitizen platform now serves over 16 million users, with approximately 500,000 Kenyans accessing services daily without physical interaction
“These are not just numbers—they represent a fundamental shift in how citizens engage with government services,” he said.
Digital Platforms as Engines of Growth
Tanui emphasized the growing importance of digital platforms as drivers of economic expansion, noting that in some countries, the digital economy contributes up to 30% of GDP.
He stressed that Kenya is positioning itself to achieve similar outcomes by supporting homegrown, indigenous digital platforms that can scale locally and regionally.
“Our focus is on building solutions that are local, inclusive, and relevant,” he said. “Digital platforms provide a powerful opportunity, especially for young people, to participate in and benefit from the economy.”
The Co-operative Bank’s involvement is expected to be critical in this effort, acting as the primary channel through which qualifying businesses will access financing under the scheme.
A Shift Toward Partnership-Driven Development
Stakeholders at the ceremony described the initiative as a model for modern development financing, bringing together public institutions, development partners, and the private sector to de-risk investment and unlock growth. This approach reflects the future of development cooperation, with a strong focus on catalyzing private sector investment in high-potential innovations and strengthening Kenya’s digital economy.
With Kenya continuing to position itself as a regional technology hub, the mechanism is expected to accelerate ecosystem growth and expand opportunities for entrepreneurs across the country.
Note:
All joint programmes of the Joint SDG Fund are led by UN Resident Coordinators and implemented by the agencies, funds, and programmes of the United Nations development system. With sincere appreciation for the contributions from the European Union and Governments of Belgium, Denmark, Germany, Ireland, Italy, Luxembourg, Monaco, the Netherlands, Norway, Poland, Portugal, the Republic of Korea, the Kingdom of Saudi Arabia, Spain, Sweden, and Switzerland for a transformative movement towards achieving the SDGs by 2030.
