Investment de-risking strategies that reduce financial risks for investors in volatile sectors is essential for inclusive economic growth, especially as we face growing inequalities.
While the Government has made significant strides in addressing these challenges, it is clear that it cannot do this alone.
The private sector, with its innovation and resources, must play a critical role. Public-private partnerships are vital for Kenya to achieve long-term economic resilience.
One standout example of what the Government is doing in the country is the De-risking, Inclusion, and Value Enhancement of Pastoral Economies (DRIVE) project.
Through this initiative, Kenya Development Corporation (KDC) has taken a leading role in providing financial services and promoting the commercialization of livestock production targeting 21 Arid and Semi-Arid Lands (ASAL) counties in Kenya.
The project, spanning four Horn of Africa countries, is a lifeline for over 1.6 million pastoralists who face unique challenges, including severe droughts that threaten their everyday life.
The DRIVE project has proven transformation in the 21 ASAL counties by increasing livestock production and raising household incomes within just the first year of its rollout.
These tangible outcomes illustrate how targeted de-risking efforts can catalyze sustainable development in high-risk areas. The Government’s role here is vital but it is just one piece of the puzzle.
To support grassroots economic growth, especially among Kenya’s marginalized areas, there has been a strong push to enable broader participation in economic activities.
Achieving this level of inclusivity, however, demands innovative and resource-intensive de-risking strategies. Therefore, private sector involvement is crucial, not just through conventional financial avenues such as loan facilities but also through mechanisms like impact investing and blended finance models.
These approaches allow the private sector investors to share in the risks and rewards, making investments in high-potential sectors more feasible.
The private sector in Kenya has a unique opportunity to lead in de-risking investments, especially in critical areas like renewable energy and sustainable agriculture. Rwanda’s Green Fund (FONERWA) is a successful example of how blended finance can support climate resilience and sustainable growth.
Similarly, Morocco’s Green Plan has revitalized its agriculture sector by attracting private investment through supportive government policies.
There definitely are great opportunities for profit and more in de-risking investments. After all, as Milton Berle once quipped, “If opportunity doesn’t knock, build a door.” We are advised that when looking for the perfect investment opportunity, we shouldn’t expect it to show up in a shiny suit—it’s probably wearing gumboots and herding cattle in Turkana; that’s where the future lies!
Kenya’s future growth depends on bold action from the private sector.
De-risking investments in high-potential sectors may not always be glamorous, but they hold the key to unlocking the country’s economic potential.
The DRIVE project is a clear testament to what can be achieved when public and private sectors collaborate. Now, more than ever, private sector stakeholders must seize the opportunity to shape Kenya’s economic future.
The writer is the Deputy Director, Portfolio Management, Kenya Development Corporation (KDC)
Financial Fortune is a digital financial news website and print business magazine published in Nairobi by Fortune & Transit Publishers Ltd and covers the financial services sector through news, views and extensive people coverage since 2018.