Absa Bank Kenya, the United Nations Development Programme and the United Nations Capital Development Fund have entered into a financing partnership aimed at expanding solar powered cold storage across Kenya.
The initiative is designed to help address an estimated $2.1 billion gap in cold chain infrastructure while making it easier for businesses in agriculture and related sectors to access funding for storage facilities.
Under the arrangement, UNCDF will provide a portfolio guarantee that enables Absa to increase asset based lending to companies investing in cold chain infrastructure. The financing will support businesses operating in areas such as horticulture, dairy, fisheries and meat.
Absa is expected to provide between $500,000 and $2 million to agricultural aggregators, equipment suppliers, exporters and other major players across the agricultural value chain. The companies will use the funds to deploy solar powered cold storage systems that can serve smallholder farmers and agribusinesses.
The financing structure is intended to address some of the challenges that have made cold chain projects difficult to fund, particularly the high initial cost of equipment and concerns about the commercial risks associated with such investments.
The partnership forms part of the second phase of a cold chain services programme being implemented by UNCDF and UNDP with support from the Mitigation Action Facility. The first phase identified strong demand for solar powered cold storage and was expected to reach more than 60,000 farmers while creating about 1,200 jobs.
Agriculture remains a major part of Kenya’s economy, contributing about a quarter of the country’s gross domestic product and employing more than 40 percent of the population, according to the Kenya National Bureau of Statistics.
However, the sector continues to face significant losses after harvest. The partners estimate that around 40 percent of agricultural production is lost each year due to inadequate handling and storage facilities.
Renato D’Souza, business banking director at Absa Bank Kenya, said the partnership would help agribusinesses invest in storage infrastructure while supporting food security and improving livelihoods.
The financing arrangement will allow the cold storage equipment itself to serve as collateral, alongside the UNCDF guarantee. This structure is expected to make it easier for businesses to obtain funding while reducing the level of risk carried by the bank.
UNCDF said the guarantee would help attract more private investment into Kenya’s cold chain sector at a time when demand for storage facilities is expected to continue increasing through 2030.
Omon Ukpoma Olaiya, UNCDF regional investment team lead for East and Southern Africa and the Arab States, said the guarantee would help reduce lending risks and unlock private sector financing for solar powered cold storage solutions.
Under the partnership, UNDP will provide support through policy engagement, technical assistance and coordination among key industry stakeholders, while UNCDF will focus on risk sharing and blended finance mechanisms.
The partners also highlighted the potential of solar powered systems to expand cold storage services into rural communities where access to reliable electricity remains limited.
Beyond reducing food losses, the initiative is expected to support Kenya’s climate commitments and strengthen the connection between farmers, processors, exporters and domestic markets.
The agreement comes as Kenya continues efforts to attract greater private investment into agricultural infrastructure, with improved cold storage seen as an important part of building a more efficient and resilient food supply chain.
