KCB Group commits Sh53B to green finance, supporting Kenya’s low-carbon economy and attracting global ESG investors.

NAIROBI, – KCB Group, East Africa’s largest bank by assets, has pledged Sh53.2 billion ($377 million) to green finance projects. The initiative supports renewable energy, sustainable agriculture, energy efficiency, and climate mitigation across Kenya.

“Green finance is no longer optional; it is essential for sustainable growth,” said Paul Russo, KCB Group CEO. “Our commitment shows that profitability and environmental responsibility can go hand in hand.”

KCB’s green loans now make up 21.32% of its total lending portfolio, approaching the 2025 target of 25%.Analysts say this positions the bank as a leader in sustainable banking in Africa in a country where lenders face a yawning $ 5 billion annual green financing shortfall.

“Africa’s green finance sector is evolving rapidly,” said Aly-Khan Satchu, Nairobi-based analyst. “International investors need credible ESG-aligned projects. KCB signals that East Africa can deliver them.”

Strategic Focus Areas

The Sh53.2 billion commitment covers:

• Renewable Energy: Financing solar and wind projects to reduce fossil fuel use.
• Energy Efficiency: Helping businesses lower energy consumption and emissions.
• Sustainable Agriculture: Loans to farmers adopting climate-smart techniques.
• Climate Mitigation: Projects to reduce greenhouse gas emissions and build resilience.

“Investing in green projects ensures long-term economic stability,” said Raymond Molenje, CEO of the Kenya Bankers Association. “KCB is leading the sustainability agenda.”

Local Impact

KCB says the funding will benefit communities nationwide. Renewable energy projects increase access to electricity in rural areas. Agriculture loans help farmers implement efficient irrigation and climate-resilient techniques.

“KCB’s support has transformed our farm operations,” said Mary Wambui, a smallholder farmer in Kiambu. “Water-efficient irrigation increased our yields and incomes.”

“Sustainable finance is a growth engine,” said Russo. “It benefits our clients, the environment, and society.”

Transparency and Global Standards

Nearly half of the Sh53.2 billion has been verified using the Climate Assessment for Financial Institutions (CAFI) tool. This ensures projects meet international ESG standards.

“Independent verification is essential for attracting international capital,” said Lisa Wentworth, ESG strategist at Ashbourne Advisory. “KCB demonstrates governance and accountability.”

Civil society groups, including Transparency International Kenya, praised the bank for its reporting.

“Accountability is central to sustainable finance,” said Sheila Masinde, executive director of Transparency International Kenya. “KCB sets an example for African banks.”

Global Implications

KCB’s initiative positions Kenya as a leader in Africa’s green finance market. Global investors increasingly seek ESG-aligned projects in emerging markets. The bank’s scale, transparency, and credibility make it a model for other institutions.

“International investors prefer banks with robust green strategies,” said Satchu. “KCB shows African markets can provide scale and credibility.”

The initiative aligns with Kenya’s Vision 2030 and its climate commitments under the Paris Agreement.

Looking Ahead

KCB plans to expand its green portfolio into electric mobility, waste management, and water conservation. It will also collaborate with multilateral development agencies to fund larger-scale sustainable infrastructure projects.

“We aim to integrate sustainability into all operations,” said Russo. “KCB wants to be a catalyst for climate-positive investment across Africa.”

Kenyan banks post mixed profits as locals surge and foreign lenders stumble, drawing global investor scrutiny amid rate shifts.

Kenyan Banks’ Diverging Fortunes Stir Investor Interest as Profit Gap Widens

NAIROBI, Oct. 9 (BW Africa) — Kenya’s banking industry is facing its most uneven earnings season in years, with local lenders delivering double-digit profit growth while foreign-owned peers retreat under the weight of shrinking margins, high funding costs, and tighter regulatory scrutiny.

Fresh half-year data reviewed by BW Africa shows that domestically controlled lenders — led by I&M Group, Equity Group, and NCBA — outperformed their foreign rivals in nearly every key metric: net earnings, deposit growth, and loan expansion. The divergence is sharpening investor focus on how well Kenyan banks can sustain returns in an economy wrestling with high interest rates and a fragile currency.

Local Banks Outpace Global Peers

I&M Group, Kenya’s fifth-largest lender by assets, posted a 36% jump in after-tax profit to KSh 8.1 billion ($63 million), lifted by strong net interest income and regional growth in Tanzania and Uganda. Equity Group Holdings, East Africa’s largest bank by customer base, reported a 16.9% rise in profit to KSh 34.6 billion ($268 million), driven by cross-border earnings that now account for almost half of group income. NCBA Bank followed with a 12.6% gain.

By contrast, Standard Chartered Kenya suffered a 21% decline in half-year profit, hurt by weaker non-interest income and higher provisioning for bad loans. Stanbic Holdings, majority owned by South Africa’s Standard Bank Group, saw profit drop 9% amid rising funding costs.

“The market is drawing a clear line between banks that understand Kenya’s retail dynamics and those that rely on foreign playbooks,” said James Mugo, senior research analyst at Nairobi-based Sterling Capital. “Local lenders are winning on agility, regional diversification, and customer stickiness.”

Rate Policy, Inflation, and Macro Uncertainty

The earnings split comes as the Central Bank of Kenya (CBK) cut its policy rate for the eighth time this year — trimming it to 9.25% from 9.50% — to stimulate private-sector lending after months of high credit costs. Inflation eased to 4.6% in September, comfortably within the CBK’s 2.5–7.5% target band.

But beneath the easing cycle lies a complex story. Kenya’s debt-service costs remain high, the shilling has shed more than 14% against the dollar since January, and liquidity pressures persist in the interbank market. The government heads to Washington next week for fresh talks with the IMF over a new support programme to stabilize external financing — a move investors say could influence capital flows and banking liquidity.

“Global funds are watching closely,” said Lisa Wentworth, sub-Saharan Africa strategist at Ashbourne Advisory, London. “Kenya’s domestic banks look strong on paper, but sovereign risk is still a factor. The currency, fiscal space, and IMF conditionalities will determine how far these profits can go.”

Why Local Banks Are Winning

Analysts attribute the outperformance of Kenyan-controlled lenders to a mix of home-field advantage and regional reach.

• Lending focus: Local banks have kept exposure to SMEs and retail customers, segments that rebounded fastest after the pandemic.
• Deposit resilience: Local lenders’ customer-driven deposits rose an average 14% year-on-year, cushioning them from expensive wholesale funding.
• Cost discipline: Digital transformation — led by Equity’s EazzyBanking and Co-operative Bank’s MCo-op Cash — has trimmed overheads and improved fee income.
• Regional buffer: Cross-border earnings from Uganda, Tanzania, Rwanda, and the DRC have offset Kenya’s slow loan demand.

Foreign lenders, meanwhile, remain constrained by legacy business models, strict compliance costs, and less exposure to mobile banking ecosystems.

“Standard Chartered and Stanbic are facing the same squeeze seen across emerging markets — lower net interest margins and higher dollar funding costs,” noted Charles Maina, economist at Cytonn Investments. “Their cost-to-income ratios have ballooned to over 50%, compared with 43% for top-tier local banks.”

Investor Reactions Mixed

The Nairobi Securities Exchange’s Banking Index has gained 7% this quarter, led by I&M Group and Co-operative Bank. Yet the rally masks uneven sentiment. Foreign institutional investors have trimmed exposure to multinationals, rotating into high-yield local names.

“Equity’s consistent earnings trajectory and regional diversification make it a core long-term holding,” said Rajiv Mehta, portfolio manager at Frontier Capital Partners, Dubai. “But we’re cautious on banks overly exposed to Kenya’s government paper, given potential repricing risk if the IMF deal changes fiscal assumptions.”

The CBK’s new risk-based pricing framework, allowing banks to price loans according to borrower risk, is also reshaping the market. While it supports profitability, it could raise default rates if economic recovery falters.

Clouds on the Horizon

Even Kenya’s best-performing banks face emerging threats. Non-performing loans have inched up to 14.2% of total lending, compared to 13.8% six months earlier, as households grapple with high living costs and businesses delay repayments.

Regulatory pressure is also intensifying. The CBK has signaled plans to enforce stricter capital adequacy ratios and enhance oversight of digital lending. Foreign banks may face heavier scrutiny on cross-border transactions, while local lenders could be tested on cybersecurity and consumer protection compliance.

“There’s no room for complacency,” warned Patrick Njoroge, the outgoing CBK governor, in a September policy statement. “We expect banks to maintain strong buffers and uphold prudent lending even in the face of temporary profit spikes.”

The Broader Picture

Kenya’s banking sector remains one of Africa’s most sophisticated, accounting for more than 50% of East Africa’s total banking assets. The system’s stability, bolstered by robust supervision, continues to attract global funds seeking exposure to high-yield African financials.

Yet the current profit divergence underscores a deeper structural shift — one that could redefine market leadership. Local lenders are increasingly regional champions, while foreign-owned banks are recalibrating or retreating to niche segments like corporate banking and trade finance.

For investors, the message is nuanced: Kenya remains an attractive, but complex, frontier. The coming months — particularly the outcome of IMF negotiations and currency stabilization efforts — will determine whether the strong earnings by domestic banks mark the start of a sustained growth cycle or a temporary outperformance in turbulent waters.

“Kenyan banks are learning to thrive in volatility,” said Mugo of Sterling Capital. “The question now is who can stay profitable when global capital tightens again.”

Kenya shifts its $5 billion railway debt from U.S. dollars to Chinese yuan, easing repayment costs and strengthening trade links with Beijing.

Kenya Converts Chinese Railway Loan Into Yuan

Kenya has converted a $5 billion Chinese railway loan into yuan to ease interest costs and reduce pressure from dollar-denominated debt. The move takes cues from Ethiopia which in July reduced its reliance on the U.S. dollar by signing currency-swap trade deals, including one with the United Arab Emirates (UAE).

Kenya’s Ministry of Finance said the move aims to boost international trade and protect the local economy. The Treasury confirmed the development on October 7, 2025, marking a strategic shift in how the country manages external borrowing.

Aligning Debt With Trade

The decision covers the Standard Gauge Railway (SGR) loan that funded the Mombasa–Nairobi line. It was financed by the Export-Import Bank of China under the Belt and Road Initiative—one of Kenya’s most ambitious infrastructure undertakings.

Following months of negotiation, Treasury officials secured Beijing’s approval to change the repayment currency. According to the Kenyan Treasury, the switch could save “hundreds of millions in annual interest costs.” Moreover, it aligns debt repayment with the currency used for much of Kenya’s trade, strengthening financial predictability.

Central Bank’s Support

The Central Bank of Kenya (CBK) has been a strong advocate of the move. Governor Kamau Thugge noted that nearly 20 percent of Kenya’s trade is now settled in yuan—up from just 2 percent eight years ago.

“Servicing part of our debt in yuan reduces exposure to dollar volatility,” Thugge explained. “It also supports long-term financial stability.”

CBK recently diversified its foreign reserves to include yuan-denominated assets. As a result, the conversion fits neatly within its broader reserve management strategy. In addition, it supports the government’s efforts to reduce dependency on the U.S. dollar.

China’s Expanding Role

Beijing remains Kenya’s largest bilateral lender, accounting for roughly 27 percent of the country’s external public debt. The Exim Bank of China agreed to re-denominate the SGR loan after technical and legal evaluations confirmed its viability.

In recent years, Chinese authorities have encouraged African economies to settle more trade and debt in yuan. Through the People’s Bank of China, Beijing has expanded currency-swap arrangements that allow central banks to access yuan directly. Consequently, Kenya’s shift is consistent with a broader continental move toward financial diversification.

Analysts note that this latest development reinforces economic trust between Nairobi and Beijing. It also reflects China’s growing role as both financier and trade partner for emerging African economies.

Economic Rationale

For Nairobi, the motivation is clear. Dollar debt has become increasingly expensive as global interest rates rise and the shilling weakens. By switching to yuan, Kenya minimizes exchange-rate risk and stabilizes its repayment schedule.

Dr. Faith Maina, an economist at Strathmore University, described the shift as “a pragmatic response to global financial realities.”

“Aligning debt servicing with trade patterns provides savings and enhances fiscal resilience,” she said.

The Treasury expects the transition to conclude by December 2025. Repayments will then be processed through accounts held with the People’s Bank of China, creating a more streamlined mechanism for debt settlement.

A Global Shift Away From the Dollar

Kenya’s action mirrors steps taken by other emerging markets. Countries such as Nigeria, Egypt, and South Africa have begun paying portions of their debt in alternative currencies to mitigate dollar risk.

According to the International Monetary Fund (IMF), the yuan’s share of global reserves has increased to 3 percent in 2025, compared with 2.3 percent in 2020. Therefore, the move signals an ongoing transition toward a more balanced, multipolar financial system.

Potential Risks

Despite the benefits, challenges remain. Liquidity in yuan markets is still limited compared with dollar markets, and financial hedging instruments are less developed. Consequently, short-term flexibility in debt management may be constrained.

Revenue from the SGR project also continues to fall short of expectations. While the conversion will not alter repayment timelines, it should cushion Kenya’s budget from abrupt currency fluctuations. Furthermore, Treasury officials argue that the long-term savings justify any transitional risks.

Investor and Diplomatic Reaction

The international response has been largely positive. Financial analysts in London and Hong Kong view Kenya’s move as a rational adjustment to global currency realignment.

As Reuters reported, neighboring countries such as Ethiopia and Zambia are considering similar conversions. Meanwhile, the Chinese Embassy in Nairobi praised the decision as “a milestone in bilateral cooperation,” highlighting its contribution to sustainable growth and financial stability.

Looking Ahead

Next, Kenya may seek membership in the Cross-Border Interbank Payment System (CIPS)—China’s alternative to SWIFT—to simplify yuan transactions. Joining this platform would make Nairobi one of Africa’s earliest yuan-clearing hubs.

In the longer term, the Treasury plans to structure future infrastructure loans in yuan or blended currency baskets. By diversifying its borrowing framework, Kenya aims to enhance debt resilience and lower long-term interest costs.

Conclusion

The conversion of Kenya’s Chinese railway loan into yuan marks a pivotal moment in the nation’s financial strategy. It reflects fiscal prudence, geopolitical awareness, and a willingness to adapt to global currency shifts.

For Beijing, it deepens its role as a trusted financier. For Nairobi, it provides lower costs, reduced exchange-rate exposure, and a sustainable path toward economic stability.