The Kenya Credit Enhancement Facility (KCEF) is a joint initiative between Financial Sector Deepening (FSD) Africa and Cardano Development, a non-banking financial institution. KCEF will provide irrevocable and unconditional credit guarantees for long-term local currency debt, primarily focusing on infrastructure-related projects.
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Set to begin operations by the end of 2023, KCEF aims to offer comprehensive guarantees of up to 100%. It plans to cover not only Kenya but also Uganda, Tanzania, Rwanda, and Zambia, with a target guaranteed portfolio of Kshs 50.0 billion (USD 350.0 million) within five years.
One of the main objectives of KCEF is to rejuvenate Kenya’s corporate bond market, which has seen a decline in recent years. By providing credit enhancement, the initiative aims to attract investors and expand the range of fixed-income investment products available. Emphasizing environmentally friendly projects, KCEF aligns with sustainable development goals, making the domestic capital market an appealing investment hub for local and international investors.
The initiative is expected to increase the participation of institutional investors and contribute to sustainable investment opportunities. The Capital Markets Authority’s (CMA) Capital Soundness Report covering Q2’2023 suggests that KCEF’s implementation will play a crucial role in supporting the off-government balance sheet financing of key national projects under the Bottom-Up Economic Model (BETA) and Vision 2030.
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The Kenya Credit Enhancement Facility is poised to stimulate corporate bond issuance, attract investors, and promote sustainable investment opportunities in the region. With a focus on environmentally responsible initiatives, KCEF aims to boost Kenya’s capital market and contribute to the country’s economic growth under the BETA framework.
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