UBA Kenya Partners with GIZ to Transform SME Access to Finance Through Innovative European-Backed Initiative

United Bank for Africa (UBA) Kenya has signed a transformative Memorandum of Understanding with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) under the Investing in Young Businesses in Africa – Supporting Entrepreneurial Ecosystem Development (IYBA-SEED) programme, marking a significant milestone in Kenya’s drive toward inclusive SME financing and sustainable economic transformation.

The partnership represents a groundbreaking approach to addressing Kenya’s substantial SME financing gap, estimated at Sh2.4 trillion ($18 billion), by developing innovative financial solutions that go beyond traditional collateral requirements to serve youth-led enterprises and women-led green businesses.

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European Multi-Partner Initiative Brings Scale and Expertise

IYBA-SEED represents a comprehensive European multi-partner initiative funded by the European Union and the governments of France, Germany, and Slovakia. The programme is implemented by five development agencies: Expertise France (lead), GIZ (Germany), Enabel (Belgium), SAIDC (Slovakia), and SNV (Netherlands), demonstrating the scale and commitment behind this collaborative effort.

In Kenya, the programme is delivered by GIZ through its Employment Promotion for Women for the Green Transformation in Africa (WE4D) initiative, which focuses specifically on women’s economic empowerment and environmental sustainability. The WE4D programme operates across multiple African countries including Kenya, Malawi, Mozambique, Tanzania, Uganda and South Africa, targeting women’s employment in green supply chains such as renewable energy, circular economy, waste management, blue economy, ecotourism and sustainable agriculture.

The timing of this partnership is particularly strategic, aligning with Kenya’s robust economic performance. According to the Kenya National Bureau of Statistics, Kenya’s real GDP grew by 4.7% in 2024, demonstrating the country’s economic resilience despite global challenges. The World Bank projects Kenya’s growth to recover to 4.9% on average during 2025-2027, driven by easing inflation, accommodative monetary policy, and increased credit growth supporting household and business incomes.

Addressing Critical Market Gaps Through Innovation

The partnership directly addresses fundamental challenges in Kenya’s SME ecosystem, where traditional financing models have consistently failed to serve the majority of small and medium enterprises. Research indicates that SMEs contribute approximately 40% to Kenya’s GDP and constitute 98% of businesses in the country, generating 30% of all new jobs annually. However, access to finance remains the primary constraint to growth for these enterprises.

The collaboration recognizes that women-led SMEs face particular challenges, with studies showing that 31.4% of SMEs in Kenya are female-owned, yet women own 61% of unlicensed SMEs compared to only 6.4% owned by men. This suggests significant regulatory and financial access barriers that the partnership aims to address through targeted interventions.

Mary Mulili, Managing Director/CEO of UBA Kenya, emphasized the strategic importance of the initiative: “At UBA Kenya, we believe SMEs are at the heart of Africa’s economic transformation. This partnership with GIZ is not only about lending, it is about equipping our staff with the tools, skills, and insights to truly understand SME needs and respond with inclusive, practical solutions. We are committed to enhancing our lending capacity, particularly for women and youth entrepreneurs, so they can access the capital, knowledge, and networks they need to thrive.”

Innovative Financial Solutions Beyond Traditional Models

The partnership will focus on developing and implementing alternative financial services that address the specific needs of underserved SME segments. Key innovations include:

Movable Asset-Based Lending: This approach allows SMEs to use movable assets such as equipment, inventory, or receivables as collateral, rather than requiring fixed assets like real estate. This is particularly relevant for young and women-led enterprises that may lack traditional collateral but possess valuable business assets.

Leasing Solutions: Equipment and asset leasing programs will enable SMEs to access necessary business tools and machinery without requiring substantial upfront capital investment, reducing barriers to business expansion and modernization.

Cash-Flow Financing: By analyzing business cash flows rather than requiring traditional collateral, this approach enables SMEs with consistent revenue streams but limited assets to access working capital and growth financing.

Gender-Intentional Credit Scoring: The development of credit scoring models that account for gender-specific challenges and opportunities in business ownership, potentially incorporating alternative data sources to assess creditworthiness more inclusively.

These innovations represent a significant departure from traditional banking approaches. As noted by the Institute of Development Studies, most funders in Kenya use traditional instruments developed for mature markets without adapting to local SME needs. The partnership aims to bridge this gap through locally relevant financial products.

Capacity Building and Knowledge Transfer

A central component of the collaboration involves comprehensive capacity building for UBA Kenya staff to develop deeper understanding of the SME ecosystem. Thomas Jaeschke, Team Leader of WE4D at GIZ Kenya, noted: “This collaboration with UBA Kenya represents an important step in building inclusive financial systems that respond to the realities of young and women-led enterprises. By combining GIZ’s technical expertise with UBA’s financial services, we can co-create innovative solutions that expand access to finance, build capacity, and promote green and sustainable growth.”

The partnership will implement several capacity-building initiatives:

Staff Training Programs: Comprehensive training for UBA Kenya personnel on SME ecosystem dynamics, gender-inclusive lending practices, and green business assessment methodologies.

Loan Application Toolkits: Development and rollout of standardized toolkits to streamline the loan application process while ensuring comprehensive assessment of SME creditworthiness and business viability.

SME Credit Readiness Programs: Training programs designed to help SMEs better understand loan requirements, improve their financial documentation, and develop business plans that meet lender expectations.

Financial Literacy Initiatives: Tailored financial literacy programs for SME owners, particularly women entrepreneurs, to enhance their understanding of financial management, business planning, and growth strategies.

Green Economy Focus and Sustainability

The partnership’s emphasis on green businesses aligns with global trends toward sustainable development and climate action. The GIZ WE4D programme specifically targets sectors driving the green transformation, including renewable energy, circular economy, waste management, blue economy, ecotourism, and sustainable agriculture.

This focus is particularly relevant given Kenya’s commitment to environmental sustainability and climate resilience. Kenya has positioned itself as a leader in renewable energy within Africa, with significant investments in geothermal, wind, and solar power generation. The country’s green economy initiatives create substantial opportunities for SMEs operating in environmental sectors, from clean technology providers to eco-friendly agricultural producers.

Recent partnerships in the region demonstrate the growing momentum behind green business support. Stanbic Kenya Foundation partnered with GIZ to launch a WE4D program targeting 300 women-led green enterprises, indicating strong market demand and institutional support for sustainable business development.

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Networking and Ecosystem Development

Beyond direct financial services, the partnership will establish networking platforms linking financial service providers with enterprise support organizations. This ecosystem approach recognizes that SME success requires more than access to capital—entrepreneurs need connections to markets, suppliers, technical expertise, and peer networks.

The networking component will include:

Financial Institution Collaboration: Creating formal and informal networks among banks, microfinance institutions, and alternative lenders to share best practices in SME financing and coordinate support services.

Enterprise Support Organization Partnerships: Connecting SMEs with business development service providers, including incubators, accelerators, training organizations, and mentorship programs.

Market Linkage Programs: Facilitating connections between SMEs and larger companies, government procurement programs, and export opportunities to expand market access.

Peer Learning Networks: Establishing platforms for SME owners to share experiences, challenges, and solutions, particularly focusing on women and youth entrepreneurs who may face similar barriers.

UBA Kenya’s Strategic SME Commitment

This partnership builds on UBA Kenya’s existing commitment to SME financing. The bank received Sh37.5 billion from its parent company for SME lending, allocated from a $6 billion SME funding agreement that UBA Plc signed with the African Continental Free Trade Area (AfCFTA). This substantial commitment demonstrates the bank’s recognition that SMEs play a pivotal role in Kenya’s economy, contributing to over 90% of the total labor force.

UBA Kenya’s approach to SME financing has evolved significantly since its establishment in Kenya. The bank previously partnered with county governments and the Tony Elumelu Foundation to support 5,000 entrepreneurs across all 47 counties, with each entrepreneur receiving $5,000 in funding plus business training and mentorship.

The bank’s loan portfolio has grown substantially, with its loan book hitting Sh4.06 billion from Sh2.86 billion, marking a 42% growth, demonstrating strong momentum in its lending operations. This growth trajectory positions UBA Kenya as an increasingly important player in Kenya’s SME financing landscape.

Policy Context and Regulatory Environment

The partnership operates within Kenya’s evolving policy framework for SME development. The Micro and Small Enterprises Authority (MSEA) has been working with development partners to strengthen the MSME ecosystem through policy development and implementation support.

Recent policy initiatives include the draft MSME Policy 2025 and the MSME Amendment Bill 2025, which aim to enhance policy implementation and address critical barriers such as limited access to finance, regulatory gaps, and other challenges hindering the growth of young and women entrepreneurs.

The regulatory environment in Kenya has become increasingly supportive of innovative financial services. The Central Bank of Kenya has implemented policies encouraging financial inclusion and alternative lending models, creating space for partnerships like the UBA-GIZ collaboration to introduce non-traditional financing approaches.

Economic Impact and Development Outcomes

The partnership’s potential impact extends beyond individual SME financing to broader economic development outcomes. Kenya’s informal sector, often referred to as the “Jua Kali” sector, accounts for approximately 80% of total employment and contributes economic activity equal to 35% of total GDP. By providing pathways for informal businesses to access formal financial services, the partnership could contribute to economic formalization and increased productivity.

Women’s economic empowerment represents a particular focus area with significant development potential. Research consistently demonstrates that when women have equal access to financial services and business opportunities, entire communities benefit through increased household incomes, improved child education and health outcomes, and stronger local economies.

The green economy focus also aligns with Kenya’s long-term development objectives under Vision 2030, which emphasizes sustainable development and environmental conservation. By supporting green SMEs, the partnership contributes to job creation in emerging sectors while addressing environmental challenges.

Regional and Continental Implications

The UBA-GIZ partnership represents part of broader continental trends toward enhanced SME financing and regional economic integration. The partnership connects to UBA’s continental presence across 20 African countries and its commitment to supporting the African Continental Free Trade Area (AfCFTA) through SME development.

Similar initiatives across Africa demonstrate growing recognition that SME development requires coordinated approaches combining public sector support, development partner expertise, and private sector financial services. The IYBA-SEED programme operates across five countries (Benin, Kenya, Senegal, South Africa, and Togo), enabling cross-country learning and best practice sharing.

Implementation Timeline and Monitoring

While specific timelines for the partnership implementation were not disclosed, the collaboration builds on existing relationships and ongoing programmes. GIZ’s WE4D programme runs through 2027, providing a substantial timeframe for partnership development and impact measurement.

Success metrics will likely include quantitative measures such as number of SMEs financed, loan volumes disbursed, jobs created, and women entrepreneurs supported, as well as qualitative measures related to business growth, financial literacy improvement, and ecosystem strengthening.

The partnership will benefit from existing monitoring and evaluation frameworks established by both the IYBA-SEED programme and UBA’s internal performance measurement systems, ensuring accountability and continuous improvement in service delivery.

Future Prospects and Scalability

The UBA-GIZ partnership represents a model that could be replicated across other markets where UBA operates, potentially scaling successful approaches throughout the African continent. The development of innovative financial products and capacity building methodologies in Kenya could inform similar initiatives in other countries facing comparable SME financing challenges.

As the partnership develops, it may also attract additional development partners and private sector participants, creating a broader ecosystem of support for SME development. The networking component of the collaboration creates foundations for sustained ecosystem growth beyond the formal partnership period.

The success of this initiative could influence broader industry practices in SME financing, potentially encouraging other financial institutions to adopt similar approaches to inclusive lending and capacity building. This could contribute to systemic change in how the financial sector serves small and medium enterprises across Kenya and the broader East African region.

For Kenya’s economic transformation agenda, the partnership represents a concrete step toward building the inclusive, sustainable economy envisioned in national development plans. By addressing both financial access barriers and capacity constraints, the collaboration has the potential to unlock significant economic potential among underserved SME segments, contributing to job creation, poverty reduction, and sustainable development outcomes.

The initiative demonstrates that effective development partnerships can bridge the gap between development goals and market realities, creating sustainable solutions that serve both commercial objectives and social impact priorities. As Kenya continues its journey toward upper-middle-income status, partnerships like this one between UBA Kenya and GIZ will play crucial roles in ensuring that economic growth translates into broad-based prosperity and inclusive development.

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By: Montel Kamau

Serrari Financial Analyst

22nd September, 2025