Partnership to scale solar-powered cold storage infrastructure, targeting post-harvest losses that see up to half of the country’s food production go to waste due to inadequate storage
Kenya’s agricultural sector is facing a significant infrastructure gap as inadequate cold storage continues to contribute to post-harvest losses across some of the country’s biggest agricultural value chains. A new financing arrangement involving Absa Bank Kenya, the United Nations Capital Development Fund (UNCDF) and the United Nations Development Programme (UNDP) is now targeting the gap by expanding access to capital for solar-powered cold storage.
The partnership introduces a strategic portfolio guarantee that will enable Absa Bank Kenya to expand asset-based financing to businesses investing in cold-chain infrastructure. The initiative is intended to address persistent storage challenges affecting horticulture, dairy, fisheries and meat, where inadequate post-harvest handling can limit the ability of farmers and businesses to preserve produce and reach markets.
At the centre of the arrangement is a portfolio-sharing guarantee provided by UNCDF. The mechanism reduces the lending risk associated with financing cold-chain infrastructure and allows Absa Bank to extend financing to a sector that has historically faced limited access to capital because of high upfront investment requirements and perceived market risks.
Under the arrangement, Absa Bank will provide between USD 500,000 and USD 2 million in financing, equivalent to approximately KES 64 million to KES 258 million, to aggregators, equipment suppliers, exporters and other large players across agricultural value chains.
The businesses receiving the financing will deploy solar-powered cold storage solutions to smallholder farmers and agribusinesses. The model is expected to help reduce post-harvest losses while giving businesses greater capacity to preserve agricultural products and access markets at scale.
The financing comes as Phase II of Kenya’s cold-chain services programme gets underway. The programme is being implemented through a partnership between UNCDF and UNDP with support from the Mitigation Action Facility (MAF).
The first phase demonstrated strong market demand for solar-powered cold storage, with pilot results indicating the potential to benefit more than 60,000 farmers and create approximately 1,200 jobs.
The roles of the two UN agencies are also distinct within the programme. UNCDF provides risk-sharing and blended-finance instruments designed to unlock private-sector investment, while UNDP supports policy engagement, technical assistance and ecosystem coordination aimed at accelerating the adoption of climate-smart cold-chain solutions.
The need for investment is particularly significant given the role agriculture plays in Kenya’s economy. According to the Kenya National Bureau of Statistics, agriculture contributes about a quarter of the country’s GDP and employs more than 40 per cent of the population.
Yet estimates indicate that Kenya loses approximately 40 per cent of its agricultural produce every year because of inadequate post-harvest handling and storage. The losses point to a wider investment gap in cold-chain infrastructure and the need for financing models that can make the sector more accessible to private capital.
For Absa Bank Kenya, the new arrangement combines agricultural financing with renewable energy solutions.
“The collaboration reflects Absa Bank’s commitment to enabling sustainable economic growth while advancing climate-smart solutions in the agricultural sector. Through this partnership with UNCDF and UNDP, we are unlocking innovative financing that empowers agribusinesses to invest in cold storage infrastructure, strengthening food security and improving livelihoods,” said Renato D’Souza, Business Banking Director at Absa Bank Kenya.
He added that the initiative places the bank at the centre of climate-smart agricultural financing by bringing together renewable energy solutions and value-chain financing.
“This initiative positions Absa Bank Kenya at the centre of climate-smart agricultural financing by combining renewable energy solutions with value chain financing to reduce food loss, strengthen supply chains, and enhance farmer incomes,” he said.
For UNCDF, the portfolio guarantee is intended to address one of the main barriers to investment in the sector: lending risk.
Through the guarantee, UNCDF is providing a mechanism to de-risk lending and catalyse private capital into Kenya’s cold-chain sector, allowing financial institutions to increase investment in sustainable agricultural infrastructure.
Omon Ukpoma-Olaiya, UNCDF Regional Investment Team Lead for East and Southern Africa and Arab States Region, said the arrangement with Absa Bank is consistent with UNCDF’s wider mandate of mobilising finance and catalysing investment to support inclusive growth in developing economies.
Kenya’s demand for cold storage is expected to grow significantly by 2030, she said, increasing the need for financing solutions capable of supporting the expansion of agricultural infrastructure.
“Through this portfolio guarantee, UNCDF is helping to de-risk lending and unlock private sector financing for solar-powered cold storage solutions. By partnering with Absa Bank, we aim to unlock investment from financial institutions and private sector partners to expand cold chain infrastructure, reduce post-harvest losses, and improve market access and incomes for farmers and agribusinesses,” she said.
The investment also has a climate dimension, particularly because the cold storage systems being financed will be powered by solar energy.
Dr. Jean Luc Stalon, UNDP Kenya Resident Representative, said reducing post-harvest losses extends beyond food security, with implications for climate action and economic development.
“Addressing post-harvest losses is not only a food security priority, but also a climate and economic opportunity. Through our partnership with UNCDF and financial institutions like Absa Bank, we are unlocking investment in sustainable cold chain solutions that reduce emissions, strengthen rural livelihoods, and build resilience across Kenya’s agricultural value chains,” he said.
The financing will be structured through asset-based lending, with solar-powered cold storage equipment serving as collateral alongside the UNCDF portfolio guarantee. This structure is intended to provide businesses with access to financing while using the assets being acquired as part of the security for the lending.
The solar component also supports Kenya’s broader transition towards clean energy, particularly in rural areas where access to reliable electricity remains limited.
Beyond the immediate financing arrangement, the partnership forms part of the wider rollout of solar-powered cold storage solutions in Kenya. By bringing financial institutions and private-sector businesses into the expansion of cold-chain infrastructure, the programme is designed to increase private-sector participation while addressing losses across agricultural value chains.
It also contributes to Kenya’s climate commitments under its Nationally Determined Contributions (NDCs), linking investment in agricultural infrastructure with the country’s wider efforts to expand climate-smart and clean-energy solutions.
