USAID-backed Kenya Investment Mechanism has partnered with private equity fund, Vital Capital, to unlock Sh 535 Million in credit to help local agri-based businesses adversely affected by the coronavirus pandemic revive operations.
The partnership seeks to identify and execute at least five completed transactions, to alleviate the strain of COVID-19 on impactful Kenyan businesses, sustaining 500 jobs.
Kenya Investment Mechanism (KIM) is a five-year program funded by the U.S. Agency for International Development (USAID) to unlock significant financing to businesses in targeted sectors that have been adversely affected by the COVID-19 pandemic.
KIM is managed by Palladium, an international impact advisory and management firm.
The USAID-backed fund aims to unlock Sh 40 Billion ($400 million) worth of investments for key sectors of Kenya’s economy, including agriculture, and for regional trade and investment opportunities. It will pull small and medium sized enterprises (SMEs) into competitive and growth-oriented value chains to foster broad-based, sustained, and inclusive economic growth in Kenya.
“We are excited to launch this major collaboration to support Kenyan agribusinesses in what is an incredibly challenging economic environment,” said Nimrod Gerber, Managing Partner, Vital Capital.
“KIM’s goals are closely aligned with our own and we have a shared vision for the economic development of the agricultural sector in Kenya. We believe this collaboration has the potential to effect real change and support smallholder farmers survive the worst ravages of the COVID-related economic crisis,” said Gerber
In Kenya, COVID-19 threatens livelihoods and food security in a nation that is already grappling with the worst locust infestation in 70 years and trying to recover from extensive flooding.
Around 27 percent of households are suffering from food shortages, according to a recent survey by the World Bank, while in May, the Central Bank of Kenya warned that some 75 per cent of the country’s SMEs face collapse without funding from banks or equity partners.
Under the agreement, Vital Capital and KIM will collaborate to identify potential opportunities in KIM’s pipeline that corresponds to Vital Capital’s investment mandate and to leverage KIM’s network of transaction advisors to more efficiently bring transactions to close under Vital Capital’s investment committee.
The collaboration follows Vital’s launch in April of the Vital Impact Relief Facility, a Sh 1Billion ($10 million) emergency loan facility to offer critical funding to promising African businesses to help them overcome the economic consequences of the COVID-19 pandemic.
“This collaboration with KIM is a significant validation of our approach and we look forward to working closely together to identify new opportunities and unearth companies providing essential services to communities in Kenya to preserve their impact and employment,” said Guido Boysen, Co-Lead of the Vital Impact Relief Facility.
“Vital Capital was quick to recognize and fast to respond to the economic consequences of COVID-19 in Kenya, and we are pleased to collaborate with them,” said Roger Bird, Kenya Investment Mechanism Chief of Party.
“As a long-standing investor in the region and, in addition to bringing new funding and a pipeline of investment opportunities in our target sectors, the Vital team bring a huge amount of experience and expertise of creating positive sustainable impact that will be invaluable as we look to create enduring economic growth in the country.”