|
Tenders are invited for Institutional and Capacity Assessment of AFC as an Apex DFI for Green and Sustainable Financing in the Agricultural Sector. Closing Date: 20 Feb 2026 Type: Consultancy BACKGROUND Financial Sector Deepening Kenya (FSD Kenya) is an independent trust dedicated to the achievement of a financial system that delivers value for a green and inclusive digital economy while improving financial health and capability for women and micro and small enterprises (MSEs). FSD Kenya works closely with the public sector, the financial services industry, and other partners to develop financial solutions that better address the real-world challenges low-income households, micro and small enterprises, and underserved groups such as women and youth face. Current FSD Kenya funders include the United Kingdoms Foreign, Commonwealth and Development Office (FCDO), The Gates Foundation, the Swedish International Development Cooperation Agency (Sida), the International Fund for Agricultural Development (IFAD) and the French Development Agency (AFD). The Agricultural Finance Corporation (AFC) was established in 1969 by an Act of Parliament (the Agricultural Finance Corporation Act (Cap 323 Laws of Kenya) to provide affordable credit to actors in Kenyas agricultural value chains. The specific objective and mandate as set out in the Act is to assist in the development of agriculture and agricultural industries by making loans to farmers, cooperative societies, incorporated group representatives, private companies, public bodies, local authorities and other persons engaging in agriculture or agricultural industries. With a network spread across the country, AFCs current mission is to provide sustainable financing though participative and collaborative financial and non-financial interventions, innovations, technology and products. In the recent past, AFC has undergone a strategic refocusing with the objective of transforming into a sustainable and impactful market maker in Kenyas agricultural finance market. Part of this transformation has included a shift in its operating model to incorporate wholesale financing as one of its business models, adding on to its existing retail lending model. Under its wholesale financing model, AFC provides wholesale funds to SACCOs, microfinance institutions and anchor clients that in turn finance unserved and underserved segments in the agricultural value chains. In addition to wholesale financing, AFC has also implemented other new business models including warehouse receipt financing, mechanization financing and the provision of credit guarantees to de-risk agricultural enterprises. In recognition of its transformation, AFC was selected as the apex institution to implement the Green Finance Facility (GFF) under the Rural Kenya Financial Inclusion Facility (RK-FINFA) Project. RK-FINFA is a six-year development project financed jointly by the IFAD and the Government of Kenya to support the transformation of rural and smallholder agriculture through private sector-led development by improving access to affordable and appropriate financial services by smallholder farmers and micro, small and medium enterprises. The GFF is established as a facility to provide wholesale capital to rural oriented SACCOs, microfinance banks (MFBs) and microfinance institutions for on-lending to smallholder farmers and rural micro enterprises for financing activities and projects in climate change adaptation and mitigation, improved environmental management and improved efficiencies in the use of natural resources. AFCs allocation under the GFF is KShs 1.080bn with three Microfinance Banks and five SACCOs already contracted for wholesale financing for on-lending to retail borrowers. AFCs role under the GFF is pivotal to address two key interrelated challenges. First, Kenyas agricultural sector is highly vulnerable to climate change and climate variability. The dependence on rain-fed agriculture and the occurrence of extreme weather events including flooding and drought have significantly impacted production and productivity, with direct effects on Kenyas food security and cascading effect on the economy. At the same time, the agricultural sector has an important impact on land use and land cover including deforestation and forest degradation as large swathes of land are cleared and converted into farmland. Second, while finance plays a pivotal role in greening Kenyas economic growth and has been identified as a critical enabler for climate change mitigation and adaptation, the financing of green investments remains limited due to several factors. By one measure, Kenyas total annual financing gap is estimated at USD 5.13bn. Further downstream, survey data shows that households access to formal finance for green investments remain low. Discussions with key potential wholesale borrowers of the GFF indicate strong demand for capital for innovative green investments. Leading financial institutions consider green financing as a key strategy in their future operations, and some are already offering green products to their clients. A key medium-term target of the GFF is to proactively increase the capital base through additional investments by other financiers with a green agenda including development finance institutions, green investment funds and UN funded programmes. This is largely informed by the recognition of the potential scale of demand and the financing gap and the imperative to scale the GFF operations and the role of AFC in financing green investments in the agricultural sector. The ability and success of AFC to qualify for and mobilize capital from investors and institutions focused on green investments requires it to align its operations and capacity with international best-practice and global standards in green and sustainable financing. This will also require AFC to obtain suitable sustainability accreditation and to develop a Green Financing strategy. In line with these ambitions, FSD Kenya with funding from the French Development Agency (AFD) is seeking the services of a consultancy firm to support AFC to become investor-ready to attract and mobilize green and sustainable finance in the agricultural sector. This consultancy is financed under the Memorandum of Understanding (MoU) signed in May 2025 between the National Treasury (NT) of the Republic of Kenya and AFD, which formalises the reallocation of the unutilised balance from the Microfinance Sector Support Credit (MFSSC) to the RK-FINFA project. It contributes directly to the implementation of Sub-component 3.1 of the RK-FINFA project (Enabling rural finance environment), which aims to promote the creation of a conducive policy and institutional environment for increased rural financial intermediation and agricultural transformation in Kenya. In accordance with the MoU, AFD funds are hosted by FSD Kenya and the National Treasury, and managed through the Directorate of Budget, Fiscal and Economic Affairs (BFEA) as the lead implementing agency of the RK-FINFA project. OBJECTIVE The primary objective is to conduct an institutional and capacity assessment and a gap analysis of the Agricultural Finance Corporation to evaluate its readiness and effectiveness as a sustainable and commercially viable Development Finance Institution for promoting green and sustainable financing in Kenyas agricultural sector. SCOPE OF WORK This Terms of Reference covers the Phase One of a phased strategy to position AFC as an apex DFI for green and sustainable agricultural financing. This phase will provide a comprehensive appraisal of AFCs institutional, governance, regulatory, and operational framework, as well as an analysis of the market for green and sustainable finance in Kenyas agricultural sector. The objective is to identify AFCs strengths, weaknesses, and opportunities, and to define the reforms and capacity-building needs required for AFC to act as an effective apex institution in green and sustainable financing. Findings from Phase One will inform Phase Two, which will focus on developing and implementing a Green Finance Strategy, a Capacity Development Programme, and governance and operational frameworks to position AFC as an apex institution for green and sustainable financing. This phase will operationalize the recommendations of the institutional and market assessment by translating them into concrete strategies, systems, and capacity-building actions that strengthen AFCs readiness to mobilize and manage sustainable finance resources. Phase Two will be implemented under a separate Terms of Reference and consultancy arrangement. Implementation of Phase Two will be subject to a formal no-objection from AFD, based on the satisfactory completion and endorsement of the phase 1 assessment report. Specific scope of work for Phase One and tasks for the consultant shall include: Institutional assessment of AFCs current mandate, governance structure, operational design and operational frameworks and assess the required alignment with the role as an apex DFI for green and sustainable financing. This assessment should at minimum examine: AFC market and financial performance including product base and business models. Formal governance and management structures including supervisory oversight Resource base required to support growth, including financial, staff, brand and market position, competitive advantage(s) balance sheet, etc. Control base, including structures and systems used to organize resources, organizational structure, technology, management and enterprise systems Governance, operational, commercial and financial and credit policies and procedures. Reference should be made to AFCs performance against the standards agreed by the African Association of Development Finance Institutions. 2. Conduct a market analysis to evaluate the opportunities for green financing in the ag Tender Link : https://reliefweb.int/job/4197498/institutional-and-capacity-assessment-afc-apex-dfi-green-and-sustainable-financing-agricultural-sector
|
