Sub-component 3.1: Scaling Up Green SME Financing: This sub-component will provide initial risk-adjusted, long-term and patient capital, including equity and/or mezzanine financing, through a dedicated newly established Green Investment Fund (GIF) to finance green enterprises, greening of existing SMEs, and adoption of circular economy processes and practices. It is expected that medium enterprises will form most of the target pipeline, but the feasibility of targeting SMEs more broadly will be explored during appraisal. Investee enterprises of GIF may include but will not be limited to beneficiary SME clusters supported under Component 2 (and/or their off takers) and other women- and youth-led enterprises that are viable for green equity financing. This will be based on a well-developed and targeted investment criteria based on business viability and acceptability of ESF risks. GIF will be managed by an independent, competitively selected Fund Manager (FM). Options for the fund’s governance framework (including board independence, licensing and oversight) and business model will be assessed during appraisal with support from Kenya’s JCAP ASA and closely coordinated with IFC. Moreover, the selection of the FM will be subject to technical review of the ToRs by the World Bank, including a ‘no objection’ to the short-list of candidate FMs and the final selection.
