On Tuesday in Nairobi, the United Nations Capital Development Fund (UNCDF) and Co-operative Bank of Kenya signed a loan portfolio guarantee aimed at increasing lending to digital startups, Ecofin Agency reported.
The agreement, part of the DigiKen program, is designed to reassure lenders concerned about the risks associated with fast-growing digital platforms and early-stage companies.
The mechanism operates on a risk-sharing model that encourages banks to extend credit to digital businesses during their growth phase.
By reducing the exposure of financial institutions, the initiative seeks to tackle one of the main barriers to startup growth across Africa: limited access to financing.
The move comes as Kenya’s digital economy continues to expand. In recent years, the country has emerged as one of Africa’s leading technology hubs, supported by a growing startup ecosystem across fintech, service platforms, and digital commerce.
Don’t Miss This:
Kenya To Use Pipeline IPO Funds To Expand Main Airport
This progress is reflected in global rankings. According to the StartupBlink index of March 2026, Kenya is among the top-performing startup ecosystems in Africa, with 612 startups listed, strengthening its position as a regional innovation hub.
Government investment in infrastructure has also contributed to this growth, with more than 40,000 kilometers of fiber optic cable deployed nationwide, according to authorities. In addition, the government’s eCitizen platform reports over 16 million users and around 500,000 daily logins.
Despite these gains, access to financing remains a major challenge for digital startups. Many are considered high-risk due to their early-stage business models, making it difficult to secure funding from traditional banks.
The new guarantee scheme is intended to close this gap by bringing together public and private partners under a shared-risk model, with the goal of increasing lending and helping local companies scale.
Don’t Miss This:
Kenya Begins Long-Delayed Rail Extension To Connect Network To Uganda
Image Credit: UNESCO
