Solar cold rooms financing targets Kenya’s farm waste, emissions
Farmers losing produce to spoilage are set to gain wider access to solar-powered cold storage after Absa Bank Kenya and two UN agencies unveiled a financing deal aimed at cutting post-harvest losses and emissions in agricultural value chains.
The United Nations Capital Development Fund (UNCDF) will provide a portfolio guarantee sharing the risk on Absa’s loans to businesses investing in cold chain infrastructure, the partners said on Thursday.
The deal, which also involves the United Nations Development Programme (UNDP), seeks to help close Kenya’s estimated $2.1 billion (Sh271 billion) cold storage gap.
Kenya loses about 40 percent of its agricultural produce every year due to poor post-harvest handling and storage, according to estimates cited by the partners.
“Addressing post-harvest losses is not only a food security priority, but also a climate and economic opportunity,” said UNDP Kenya resident representative Jean Luc Stalon.
Dr Stalon said investment in sustainable cold chain solutions would reduce emissions, strengthen rural livelihoods and build resilience in agricultural value chains.
Food that spoils before reaching the market wastes the land, water, fertiliser and fuel used to produce it, while solar-powered cooling cuts reliance on diesel generators in areas with unreliable electricity.
Under the arrangement, Absa will lend between $500,000 (Sh64 million) and $2 million (Sh258 million) to aggregators, equipment suppliers, exporters and other large agricultural players.
The firms will in turn deploy solar-powered cold storage to smallholder farmers and agribusinesses in the horticulture, dairy, fisheries and meat value chains.
The loans will be asset-based, with the cold storage equipment serving as collateral alongside the UNCDF guarantee.
The sector has historically struggled to access credit because of high upfront investment costs and perceived market risks.
“Kenya’s cold storage demand is projected to grow significantly by 2030, underscoring the urgent need for scalable financing solutions that support the growth of agricultural infrastructure,” said Omon Ukpoma-Olaiya, UNCDF’s regional investment team lead for East and Southern Africa and the Arab States.
Ms Ukpoma-Olaiya said the guarantee was intended to draw in investment from other lenders and private sector partners.
The deal coincides with the start of the second phase of a cold chain services programme run by UNCDF and UNDP with support from the Mitigation Action Facility.
The first phase showed strong demand for solar-powered cold storage, with pilot results pointing to the potential to benefit more than 60,000 farmers and create about 1,200 jobs.
“This initiative positions Absa Bank Kenya at the centre of climate-smart agricultural financing by combining renewable energy solutions with value chain financing to reduce food loss, strengthen supply chains, and enhance farmer incomes,” said Renato D’Souza, Absa Bank Kenya’s business banking director.
Agriculture contributes about a quarter of Kenya’s gross domestic product and employs more than 40 percent of the population, according to the Kenya National Bureau of Statistics.
The partners said the rollout will support Kenya’s climate commitments under its Nationally Determined Contributions.
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