Kenya has launched a new financing mechanism designed to strengthen its digital economy by unlocking capital for local digital platforms and startups. As part of the initiative, the United Nations Capital Development Fund (UNCDF) and the Co-operative Bank of Kenya signed a $900,000 loan portfolio guarantee agreement under the Digital Platforms Kenya (DigiKen) programme. Through this partnership, the bank will serve as the main financial partner, helping expand access to finance for micro, small and medium enterprises (MSMEs) operating within the country’s growing digital platform ecosystem.
The agreement was formalized during a signing ceremony attended by representatives from the Government of Kenya, the European Union, the United Nations system, private sector stakeholders and development partners. Speaking at the event, Stephen Jackson, UN Resident Coordinator in Kenya, described the mechanism as an important step toward addressing one of the most significant challenges faced by startups—limited access to financing. By sharing risk among partners, the initiative aims to enable lending to businesses that might otherwise struggle to secure capital while maintaining strong financial discipline. He also noted that the programme is intended to help shift perceptions of the digital sector from being seen as high-risk to one with long-term potential.
Representing the EU Delegation to Kenya, Ondřej Šimek highlighted that the programme will play a key role in supporting innovative MSMEs, particularly those building digital platforms. Many companies, he noted, face obstacles not due to a lack of demand but because they cannot access the resources needed to scale. The initiative is expected to unlock growth opportunities while contributing to job creation and strengthening cooperation between the EU and Kenya in areas such as digital transformation and private-sector development.
At the same time, Vincent Marangu from the Co-operative Bank of Kenya emphasized that the partnership will allow the bank to extend financing to a larger number of businesses while maintaining strong governance and credit standards. The bank will play a crucial role in ensuring that qualifying enterprises can access the funds needed to expand and innovate.
The initiative is closely aligned with Kenya’s national development priorities. Delivering a keynote address, John Tanui, Principal Secretary in the ICT Ministry, said the financing mechanism supports the government’s Bottom-Up Economic Transformation Agenda and complements the country’s Digital Masterplan. He noted that Kenya has made significant progress in building the foundations of a digital economy, including the expansion of more than 40,000 kilometers of fibre optic infrastructure nationwide. In addition, the government’s eCitizen platform now serves more than 16 million users, with about 500,000 people accessing services daily online rather than visiting government offices.
Officials also highlighted the growing role of digital platforms as drivers of economic growth. In some countries, the digital economy contributes up to 30 percent of GDP, and Kenya is working to achieve similar outcomes by supporting homegrown digital solutions that can scale both locally and regionally. According to Tanui, digital platforms present significant opportunities, particularly for young people, to participate more actively in the economy.
Stakeholders at the ceremony described the financing mechanism as an example of modern development cooperation, bringing together public institutions, development partners and the private sector to reduce investment risks and stimulate innovation. As Kenya continues positioning itself as a regional technology hub, the initiative is expected to accelerate the growth of the digital ecosystem and create new opportunities for entrepreneurs across the country.
