The United States Agency for International Development last week launched a $6 million program to support small businesses and financial institutions in northern Kenya that are looking to implement climate-smart practices and enhance their resilience to climate-related challenges.
The region suffers from recurring droughts; when it does rain, it often floods and causes people to lose their livelihoods.
Residents of 10 northern Kenyan counties heavily depend on their livestock for food and income. Over the years, alternating periods of drought and floods have killed animals, pastures and crops, leaving millions in need of humanitarian assistance.
USAID recently set aside $38 million in loans and investments to build resilience among small businesses in these arid and semi-arid regions. The $6 million investment is part of the larger program.
Abubakar Aidarus is the head of Solargen, an organisation that provides power sources and irrigation tools to farmers in Garissa and Wajir counties. Solargen received $500,000 from USAID last year.
Aidarus said the new investment has helped his business reach more places and people.
“We are from this area. We understand that the services are needed, and they are excluded from the financial systems and the grid as well,” Aidarus said. “There is no access to energy. Being able to get this investment first gave us the opportunity to put up and the courage to move to Wajir and establish an operation there. It gave us an opportunity to turn fewer customers away.”
Venny Mayaka works with a nongovernmental organisation that implements the USAID Kuza program in northern Kenya. Kuza is the Swahili word for nurture.
Mayaka said USAID will address the community’s most urgent needs in managing the impact of climate change in their homes.
“USAID KUZA is coming in to bridge the gap in terms of providing access to financial services but also providing incentives in form of financing, catalytic financing,” Mayaka said. “This financing goes into [addressing] the missing links in terms of provision of water, provision of technical assistance to some of the clients, providing the access to finance but also providing some of the services to the communities. And this is cascaded down to the communities.”
Aidarus said the financial support his company received enabled it to support its customers and give them more time to repay the loans.
“Within 18 months they’re able to take full advantage of the resource that they have, which is the farm, and be able to pay us back and continue with the system,” Aidarus said. “So that really increases their ability to produce.”
For small and medium enterprises (SMEs), Aidarus added, having constant, reliable and affordable power increases their income.
Mayaka said USAID wants to finance people and businesses attempting to overcome climate change issues.
“We want to see a scale up of the number of SMEs reached in terms of climate finance investments, best practices in environmental conservation and innovations towards addressing aspects of climate change,” Mayaka said. “We’d want to see more micro and small enterprises reached through the financial institutions and we also wish to see more products developed that are agile to address some of the challenges.”
USAID said it is developing a digital tool that allows data entry and captures data points about reducing carbon emissions, energy access and financial inclusion in its clients’ funds.
The agency says the tool will ensure that the investments align with its climate change objectives.
