The United Nations Capital Development Fund (UNCDF) and the Co-operative Bank of Kenya have signed a $900,000 loan portfolio guarantee agreement under the Digital Platforms Kenya (DigiKen) Programme, aimed at expanding access to finance for micro, small and medium enterprises (MSMEs) operating within Kenya’s growing digital platform economy.

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, the agreement forms part of the Digital Platforms Kenya (DigiKen) Programme. DigiKen is a joint United Nations initiative funded by the European Union through the UN Joint SDG Fund, led by UNESCO, and implemented by UNCDF, UNEP, and UN Women.

The guarantee facility is designed as a risk-sharing mechanism to encourage increased lending to MSMEs and digital platform- enabled businesses that often face constraints in accessing appropriate financing. The facility supports the expansion of credit to underserved segments while ensuring that credit appraisal, lending decisions, and portfolio management remain fully within the bank’s established risk management frameworks.

“Kenya’s digital economy holds enormous promise, but talent and ideas alone are not enough. Entrepreneurs, particularly young people, need access to finance that is timely, inclusive and responsive to their realities. This partnership is a practical step towards unlocking blended finance, widening opportunity and showing what is possible when public and private actors work together to back innovation, enterprise and decent jobs. UNCDF as a risk absorber capital provider of a guarantee to Cooperative Bank of Kenya makes this strategic partnership essential in unlocking access to finance to digital enabled MSMEs,” said Dr. Stephen Jackson, United Nations Resident Coordinator in Kenya.

Through the $900,000 guarantee facility, UNCDF seeks to catalyse additional private sector financing for innovative MSMEs operating within digital platform value chains. By partnering with financial institutions such as the Co-operative Bank of Kenya, the programme aims to help unlock additional financing opportunities while strengthening the broader entrepreneurial ecosystem.

“This partnership allows us to extend financing to more businesses while upholding the strong governance and credit discipline that define Co-operative Bank. Our goal is to widen the circle of opportunity for enterprises that are ready to grow. We have always believed that financial inclusion works best when it is built on sound lending principles — and with UNCDF’s support, we can demonstrate this on a much larger scale. The entrepreneurs we aim to support aren’t seeking concessions; they want a financial partner that recognizes their potential. This initiative positions us to do exactly that,” said Vincent Marangu, Director Co-operatives Banking Division at Co-operative Bank of Kenya Limited.

European Union Deputy Ambassador Ondřej Šimek emphasized that the program will play a critical role in supporting small and medium-sized enterprises (SMEs), particularly those developing digital platforms. “Many innovative companies face challenges not because of lack of demand, but because they cannot access the capital needed to grow,” he said. “This initiative will help unlock that growth while also contributing to job creation.” Šimek added that the programme reflects a broader evolution in EU–Kenya cooperation, now increasingly focused on digital transformation, private sector development, and strategic infrastructure.

The initiative is implemented in alignment with the Government of Kenya’s digital transformation agenda, particularly through collaboration with the Ministry of Information, Communications and the Digital Economy, which continues to play a key role in advancing innovation, entrepreneurship, and digital inclusion across the country.

Delivering a keynote address at the launch event, John Tanui, Principal Secretary in the Ministry of Information, Communications and the Digital Economy, underscored that the financing mechanism is fully aligned with the government’s Bottom-Up Economic Transformation Agenda (BETA), particularly its five key pillars. He highlighted that digital transformation remains central to Kenya’s development strategy, guided by the national Digital Masterplan.

“We have made significant progress in building the foundations of a digital economy,” Tanui said.
According to Tanui: Over 40,000 kilometers of fibre optic cable have been laid across the country to expand connectivity. The government’s eCitizen platform now serves over 16 million users, with approximately 500,000 Kenyans accessing services daily without physical interaction. “These are not just numbers—they represent a fundamental shift in how citizens engage with government services,” he said.

Tanui emphasized the growing importance of digital platforms as drivers of economic expansion, noting that in some countries, the digital economy contributes up to 30% of GDP. He stressed that Kenya is positioning itself to achieve similar outcomes by supporting homegrown, indigenous digital platforms that can scale locally and regionally.

“Our focus is on building solutions that are local, inclusive, and relevant,” he said. “Digital platforms provide a powerful opportunity, especially for young people, to participate in and benefit from the economy. The Co-operative Bank’s involvement is expected to be critical in this effort, acting as the primary channel through which qualifying businesses will access financing under the scheme.”