Financing the Transition to Net-Zero in Kenya: Challenges and Opportunities

Description

Page: 480-488

Jackson Barngetuny (School of Business, University of Eastern Africa, Baraton Kenya)

The transition to a net-zero economy is vital for Kenya’s sustainable development, given its growing energy demands and environmental challenges. This study examines the financial mechanisms required to support Kenya’s shift to a low-carbon economy, identifying key barriers and opportunities for financing clean energy projects. A mixed-methods approach, combining qualitative and quantitative data, is used to analyze Kenya’s green financing landscape. Data were gathered through literature review, key informant interviews (KIIs), focus group discussions (FGDs), and surveys, involving stakeholders such as government officials, financial institutions, and private sector actors. The findings reveal challenges in financing the transition to net-zero, including high capital costs, regulatory uncertainty, and limited local expertise in green project evaluation. Despite the growing recognition of green bonds and carbon markets as financing tools, their adoption remains limited. Key respondents emphasized the need for a stable policy framework and better institutional capacity. Qualitative insights suggest that stronger public-private collaboration and enhanced international climate finance mechanisms, like the Green Climate Fund, could help de-risk investments. Opportunities to scale up green financing include expanding Kenya’s green bond market, leveraging carbon pricing, and attracting private equity in renewable energy technologies. Recommendations include strengthening regulatory frameworks, improving local financial institutions’ capacity, and promoting public-private partnerships. Targeted education on green financing products is also crucial. Ultimately, the study highlights the importance of a robust financial ecosystem to achieve Kenya’s climate goals and ensure sustainable development.