The United Nations Capital Development Fund (UNCDF) and Co-operative Bank of Kenya have signed a $900,000 loan portfolio guarantee agreement to unlock financing for micro, small and medium enterprises (MSMEs) operating in Kenya’s fast-growing digital platform economy.
The agreement, signed under the Digital Platforms Kenya (DigiKen) Programme, is designed to reduce lending risks for financial institutions and expand credit access to underserved digital businesses. DigiKen is a joint United Nations initiative funded by the European Union through the UN Joint SDG Fund and implemented by UNCDF alongside UNESCO, UNEP and UN Women.
The guarantee facility will act as a risk-sharing mechanism, enabling Co-operative Bank to scale lending to MSMEs that typically struggle to secure financing, particularly those operating within digital platforms. Lending decisions and risk management will remain under the bank’s established frameworks.
“Kenya’s digital economy holds enormous promise, but entrepreneurs need access to finance that is timely, inclusive and responsive,” said United Nations Resident Coordinator Stephen Jackson, noting the partnership aims to unlock blended finance and support job creation.
UNCDF expects the facility to catalyse additional private sector investment into innovative MSMEs, strengthening Kenya’s broader entrepreneurial ecosystem.
Co-operative Bank said the partnership would allow it to extend credit to more businesses without compromising lending discipline. “Our goal is to widen the circle of opportunity for enterprises that are ready to grow,” said Vincent Marangu, Director of Co-operatives Banking.
European Union Deputy Ambassador Ondřej Šimek said the initiative would help address a key constraint facing SMEs—limited access to growth capital—while supporting job creation and digital transformation.
The programme aligns with Kenya’s digital economy agenda under the Bottom-Up Economic Transformation Agenda (BETA), with the Ministry of Information, Communications and the Digital Economy playing a central role.
Principal Secretary John Tanui said Kenya has laid over 40,000 km of fibre optic cable and grown its eCitizen platform to more than 16 million users, underscoring progress in digital infrastructure. He added that digital platforms could significantly boost economic output, with some countries deriving up to 30% of GDP from the digital economy.
“Digital platforms provide a powerful opportunity, especially for young people, to participate in and benefit from the economy,” Tanui said.
Co-operative Bank will serve as the primary channel for disbursing financing to eligible businesses under the scheme.
Note: An earlier version of these article quoted $1.8M instead of $900,000 loan portfolio guarantee. We have since corrected to reflect the right amount as $900,000.