Exploring Financing for Green-Tech SMEs in East Africa: Current Trends and Risk Appetite

Aarti Krishnan


  • Green-tech small-medium enterprises (SMEs) are insufficiently studied and lack definitional boundaries. They are classified as two types: born-green, where SMEs use green technologies at the get-go proactively attempting to prevent environmental damage; and retrofitted SMEs which incrementally aim to enhance eco-efficiency and reduce ecological footprints. These can be viewed as a fluid spectrum, rather than as two mutually exclusive categories.
  • The key early finance funders (pre-seed/seed/start-up/early growth) appear to be friends and family, venture capital firms, accelerators, philanthropic investments and donors
  • Born-green SMEs are predominantly in sustainability/energy sectors and agricultural-tech across East African Community (EAC) countries. Kenya outperforms its counterparts in terms of estimated revenues.
  • Rwandan firms seem to outperform other EAC country SMEs in relation to attracting higher funding per firm, however Kenya has attracted the greatest number of investors. Kenya appears to have the most diversified funding and investors’ portfolio within the EAC.
  • The composition of retrofitted SMEs, apart from agriculture/agtech varies across countries. Kenya and Rwanda outperform counterparts in terms of revenue, despite the Rwandan SMEs being younger.
  • Kenyan and Rwandan retrofitted SMEs have the most diversified funding and investors and have raised the highest funding. Uganda and Tanzania have performed very similarly and are still generally at seed/early venture capital stage.
  • There seems to be considerable cross-border funding across EAC countries, especially between Kenya and Rwanda.

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