IGPN - International Green Purchasing Network

March 6, 2024

Unlocking USD 6.7 million for dairy value chain

GO4SDGs developed a finance-ecosystems project for SMEs to assess and facilitate the uptake of resource-efficient and cleaner production (RECP) in small and medium-sized enterprises (SMEs) in two value chains (dairy and tea) in Kenya.

The project brought together diverse partners to create an ecosystem to evaluate and implement commercially viable RECP interventions that could be replicated in similar ecosystems across Africa. This includes two prominent value chains in the agri-food sector, Meru Diary Cooperative Union (MDCU) and Kenya Tea Development Agency Holdings Limited (KTDA), the Kenya National Cleaner Production Centre (KNCPC), a finance expert (Fintech Frontiers Kenya Ltd), along with two financial institutions, Absa Bank Kenya Plc, and the African Guarantee Fund.

RECP Opportunity Assessment:
During the pilot, extensive assessments were conducted by KNCPC, focusing on two milk cooling plants and the milk processing plant within MDCU, looking at three areas: water use and wastewater management, raw materials use and solid waste management, energy use and greenhouse gas emissions. KNCPC also analysed the potential for industrial symbiosis and assessed environmental compliance levels, offering recommendations for improvement within MDCU and its associated SMEs. MDCU committed to self-financing the low-capital RECP upgrade interventions, which included measures to reduce water consumption, enhance energy efficiency, optimize milk processing, and reduce waste. With tailor-made credit models developed by the finance expert, MDCU commenced negotiations with Absa Bank Kenya Plc for a commercial facility to support the larger capital RECP upgrade recommendations.

Unlocking Value for Money:
Through a USD 67,500 investment in RECP assessments and customized financing expertise into the pilot project by GO4SDGs, MDCU was able to secure USD 6.7 million in commercial financing for RECP upgrades that will foster efficient water management, waste reduction, energy efficiency, and environmental compliance.

Beyond financial gains, the investment also generated positive environmental and social impacts. It is important to note that the assessment only covered a fraction of MDCU's operations, emphasizing the vast potential for RECP financing opportunities within the entire value chain, including the 33 remaining milk cooling plants and the 160 SMEs supplying goods and services to the processor.

This pilot project showcases the potential for transformative change through strategic partnerships and innovative financing models, seizing opportunities to realize the full potential of value for money.

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