KDC invests US$3.86M in Githunguri Dairy to expand MSME credit access

KENYA – The Kenya Development Corporation (KDC) has injected US$3.86 million (KES500 million) into Githunguri Dairy Cooperative Society (GDC) to strengthen financial inclusion and expand credit access for Kenya’s small business sector.

This substantial investment is a critical component of the government’s broader strategy to empower micro, small, and medium enterprises (MSMEs) by improving access to long-term financing, particularly for capital-intensive projects that have historically struggled to secure adequate funding from traditional financial institutions.

However, access to affordable, long-term credit has remained a persistent challenge, constraining the growth potential of thousands of small businesses across the nation.

Through this strategic partnership with Githunguri Dairy Cooperative Society, KDC aims to address this financing gap and create a sustainable model for supporting entrepreneurship and economic development.

The KES500 million injection into Githunguri Dairy Cooperative is provided under the World Bank-backed Supporting Access to Finance for Economic Recovery (SAFER) Programme.

This comprehensive initiative was designed to promote MSME growth by improving credit access, supporting innovation, and strengthening the financial infrastructure available to small businesses across Kenya.

The SAFER Programme represents a partnership between the Kenyan government and international development partners to address systemic challenges in MSME financing.

The programme recognizes that economic recovery and sustainable growth require a vibrant small business sector with adequate access to capital, technical support, and market opportunities.

By channeling resources through established institutions like savings and credit cooperative societies (SACCOs), the programme leverages existing community-based financial networks that already have relationships with MSME borrowers and understand local market dynamics.

This approach of working through SACCOs rather than exclusively through commercial banks reflects an understanding that traditional banking institutions often struggle to serve the MSME segment due to perceived risks effectively, high transaction costs relative to loan sizes, and limited understanding of informal sector businesses.

SACCOs, by contrast, have deep community roots, lower operating costs, and member-driven governance structures that can facilitate more flexible and responsive lending to small businesses.

Trade and Investment Cabinet Secretary Lee Kinyanjui announced that the corporation is actively exploring mechanisms to make financing more accessible, affordable, and flexible for investors and institutions engaged in capital-intensive industrial projects.

“Through the KDC, we are looking at extending the lending period from the current seven years to ten years and reducing the interest rate from 9pc to 8pc,” Cabinet Secretary Kinyanjui stated.

“The objective is to make long-term credit more accessible to investors and institutions, particularly those involved in capital-intensive industrial projects.”

These adjustments in lending terms reflect a recognition that many industrial and manufacturing projects require longer gestation periods before generating sufficient returns to service debt comfortably.

By extending repayment periods and lowering interest rates, KDC is creating more favorable conditions for investment in productive sectors of the economy, potentially catalyzing increased private sector participation in manufacturing, agribusiness, and other priority areas identified in Kenya’s economic development agenda.

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