The Nairobi International Financial Centre (NIFC) announced plans to establish a KSh65 billion ($500 million) fund aimed at financing Kenyan startups.
Half of the capital will be allocated to technology and artificial intelligence ventures, with the remainder supporting other emerging businesses.
International and local venture capitalists will provide the funding, while NIFC will lead the fundraising and the assessment of eligible startups.
“Access to capital is a challenge for Kenyan startups, so how can we provide capital for these startups? That’s why we want to co-host a fund of $500 million so that we can deploy it into that segment,” said Daniel Mainda, NIFC chief executive, in an interview.
NIFC has not yet identified a co-host or a fund manager, but the selection process has begun and investors are prepared to commit money.
Mainda added that the fund will address two priorities: supplying capital to startups and small-medium enterprises, and attracting foreign exchange into Kenya.
In the half-year to June, Kenyan startups secured only KSh16 billion in funding, the lowest level since 2021 and a 45 per cent drop from the KSh29 billion raised in the same period a year earlier.
By co-hosting the fund and conducting due diligence, NIFC aims to boost confidence among international investors interested in Kenyan startups.
Since its launch in 2022, NIFC has drawn about 40 firms to the country, including Bupa Global and Lloyds of London, which received certification in June.
Certified firms benefit from tax incentives such as a reduced corporate income tax of 15 per cent for the first ten years and 20 per cent for the next ten years, compared with the standard 30 per cent, provided they invest KSh3 billion, operate as a holding company with regional headquarters in Kenya, and have at least 70 per cent Kenyan senior management.
To date, NIFC has facilitated KSh26 billion ($200 million) of foreign direct investment and targets up to KSh650 billion ($5 billion) and certification of at least 150 firms by 2030, with the new fund expected to accelerate those goals.
