Kenya Association of Manufacturers (KAM) and African Guarantee Fund for Small and Medium-sized Enterprises (AGF) have signed a Memorandum of Understanding (MoU) to promote the growth and development of the manufacturing Small and Medium-sized Enterprises (SMEs) in Kenya.
KAM and the Guarantee Fund will collaborate to identify and analyze funding gaps, institutional challenges and key impediments in the manufacturing sector and collaborate on implementing solutions to the same. The agreement will also be instrumental in promoting blended financing, including green financing, to trigger appetite and demystify concerns for private sector players to join.
This is in line with both institutions’ emphasis on manufacturing and value-addition as key ingredients for employment-creation and economic development in Kenya.
The MOU also focuses on the attainment of the Standard Development Goals (SDGs) through KAM’s Green Growth Initiative that promotes interventions enhancing the resiliency of the production system to climate change and AGF’s Green Guarantee Facility that provides a special window to Financial Institutions providing access to financing for SMEs in green energy and a variety climate adaptation initiatives.
This will be achieved through AGF’s guarantee products and capacity development and KAM’s Sustainable Use of Natural Resources & Energy Finance (SUNREF) credit and technical facility.
Through SUNREF, the Association provides financial solutions to green energy initiates with the aim of mitigating climate change. SUNREF is the tailor-made solution that enables companies to acquire better quality equipment, insulate buildings, save on costs, increase competitiveness as well as develop green energy projects, or services and activities related to energy management through provision of concessional debt finance and free technical assistance.
“The signed partnership sets out two key areas of collaboration. It will on one hand ensure energy efficiency and conservation initiatives and on the other hand, involve banks in identifying highly potential micro and small enterprises and recommending them to be supported within the recently launched KAM Manufacturing SME Hub,” said KAM CEO, Ms. Phyllis Wakiaga.
The Manufacturing SME Hub is geared towards preparing, nurturing and growing manufacturing SMEs to take full advantage of the available markets. The Hub seeks to address the challenges affecting SMEs in the country including unfriendly policies and regulatory regime, tedious and lengthy process in quality standards and certifications, access to markets, access to affordable finance and poor governance structures.
Speaking during the signing ceremony, AGF CEO Felix Bikpo said, “SME financing cannot be enhanced by simply scaling up volumes of financing but by developing innovative delivery models and finding ways of enhancing the SMEs’ capacity, as ultimately, this is what their collateral for accessing more credit becomes.”
He termed the partnership as a pacesetter, hailing it as the first between AGF and a national manufacturing association among the 40 countries where AGF is operational.