Absa Bank Kenya has teamed up with two United Nations agencies to unlock financing for solar-powered cold storage, targeting a $2.1 billion gap that leaves nearly half the country’s food production vulnerable to spoilage.
The bank announced a strategic portfolio guarantee arrangement with the UN Capital Development Fund (UNCDF) and the UN Development Programme (UNDP) on Wednesday, September 24, in Nairobi. The partnership will let Absa expand asset-based financing to businesses investing in cold chain infrastructure, addressing losses that have plagued horticulture, dairy, fisheries, and meat value chains for years.
How the Guarantee Works
A portfolio-sharing guarantee from UNCDF sits at the center of the deal. The mechanism reduces lending risk for Absa and opens the door to a sector that has historically struggled to access capital, largely because high upfront equipment costs and perceived market risks have kept commercial lenders on the sidelines.
Under the arrangement, Absa will extend loans ranging from $500,000 to $2 million, or roughly KES 64 million to KES 258 million, to aggregators, equipment suppliers, exporters, and other large players across agricultural value chains. Khusoko understands the cold storage equipment itself will serve as collateral, a structure designed to lower the barrier for businesses that lack conventional assets to pledge against a loan.
Those businesses will then deploy solar-powered cold storage units to smallholder farmers and agribusinesses, cutting post-harvest losses and giving producers a better shot at reaching markets at scale.
Why Post-Harvest Losses Matter
The scale of the problem explains why development finance institutions have moved to address it directly. Kenya loses close to 40 percent of its harvest annually to inadequate storage and unreliable cold chains, according to UNDP figures, a gap that undercuts farmer incomes, drives food insecurity, and adds unnecessary emissions from spoiled produce and diesel-powered refrigeration.
Dr. Jean Luc Stalon, UNDP Kenya’s Resident Representative, has framed the shortfall as an opportunity rather than a loss. Kenya faces post-harvest food losses of about 40 percent, largely due to gaps in cold chain systems, grid reliability, and the protection of local produce, he said, adding that within that challenge lies a $2.1 billion opportunity to strengthen the country’s cold chain, get food to tables, boost the economy, and build a more resilient future.
UNCDF has taken a similar line on the role guarantees play in getting private capital moving. Omon Ukpoma-Olaiya, the agency’s Regional Investment Team Lead for East and Southern Africa and the Arab States, has said the fund is co-leading the initiative through concessional loans and guarantees for large cold storage operators, an approach designed to crowd private lenders into a market they have avoided on their own.
Part of a Wider Push
Wednesday’s announcement lands as Phase II of the cold chain services programme gets underway in Kenya, implemented jointly by UNCDF and UNDP with backing from the Mitigation Action Facility. Phase I already tested market appetite for solar-powered cold storage, with pilot results pointing to potential benefits for more than 60,000 farmers and the creation of roughly 1,200 jobs.
Within the collaboration, UNCDF handles risk-sharing and blended finance instruments meant to unlock private-sector investment, while UNDP focuses on policy engagement, technical assistance, and coordinating the wider ecosystem of service providers, financial institutions, and farmer cooperatives needed to scale the model nationally.
The Absa deal follows a pattern of similar arrangements UNCDF has struck with Kenyan lenders in recent months, including a shared-risk facility with Co-operative Bank covering both digital businesses and cold chain financing, and direct concessional lending to agritech firms such as SokoFresh.
Taken together, the deals signal a deliberate strategy: rather than fund cold storage infrastructure directly, UN agencies are using guarantees to persuade commercial banks to lend where they previously would not, betting that de-risked capital will do more to close Kenya’s cold chain gap than grants alone.
