Norway, through the Norwegian Agency for Development Cooperation (Norad), has introduced risk-sharing financing and acceleration programmes to improve credit access for Kenyan small and medium-sized enterprises, especially those in the green and blue sectors.
A partnership with Equity Bank has allowed the lender to grant 1,500 new loans to businesses such as fish farmers, fishermen and small-scale seafood processors, with each loan expected to create about two jobs.
Mehraz Rafat, Senior Adviser in Norad’s Department for Partnerships and Shared Prosperity, explained that the facility absorbs between 60 and 70 per cent of potential lending losses, enabling the bank to increase its exposure to previously deemed risky borrowers. “Traditionally, banks were not giving a lot of loans to the blue economy because it was considered too risky. We established a risk-sharing facility where, if losses occur, we cover 60 or 70 per cent while the bank takes on the remainder,” he said.
The initiative forms part of a broader Norwegian programme launched in 2023 to bring African and international incubators and accelerators to Kenya and to boost financing for young entrepreneurs.
Norad has pledged roughly 600 million Norwegian kroner, about USD65 million, in grant funding to participating organisations, which have subsequently attracted additional private capital.
Norway’s Ambassador to Kenya, Siv Cathrine Moe, said that supporting SMEs and expanding employment opportunities remain central to the bilateral development partnership. “Creating jobs is really what Kenya needs, and this is a big priority for us. Job creation is an important priority in Norwegian development policy, and SMEs are an important part of that,” she said.
The programme also backs Kenyan firms developing assistive products for people with disabilities, a market heavily reliant on imports. Bernard Chiira, founder and chief executive of Assistive Technologies for Disability (AT4D) Trust, noted that the Innovate Now accelerator has aided more than 50 early-stage businesses since 2022, with some expanding into the United Kingdom and Europe.
Norad estimates that its wider interventions have reached close to 5,000 SMEs across various programmes, while identifying an annual financing gap of USD330 billion to USD480 billion for African businesses.
Lucas Robinson of Renew Capital argued that conventional lending alone cannot close this gap, suggesting that embedded finance and startup-driven models could provide additional pathways for underserved firms, particularly in the green and blue economies.
The Norwegian approach aims to use development assistance to absorb early-stage risk and attract commercial investors, with the longer-term goal of fostering sustainable enterprises, affordable credit and lasting employment beyond the aid period.
