Kenya is developing a new financing approach to accelerate green and climate-resilient construction as extreme weather, infrastructure losses and limited domestic green capital expose the financial and physical risks of conventional buildings. The Finance Accelerator programme, launched in February 2026, is bringing together banks, developers, policymakers, housing financiers and industry bodies to address one of the sector’s central constraints: turning Kenya’s decarbonisation ambitions into projects that financial institutions can fund at scale.
The urgency is increasingly visible in the country’s exposure to climate-related shocks. The 2024 floods affected 80% of Kenya’s counties, displaced more than 280,000 people and caused an estimated KES 50 billion to KES 70 billion in direct infrastructure damage, according to figures cited by the programme. More than 300 people died in building collapses and drowning incidents during the disaster. A further 294 people were reported killed in 2025 amid heavy rains and landslides.
For businesses, households and financial institutions, these events have implications that extend beyond emergency response. Damage to buildings and infrastructure can interrupt business operations, disrupt supply chains, increase insurance claims and weaken the value of physical assets. As climate risks become more material to investment decisions, the design and financing of buildings are increasingly becoming issues of financial resilience as well as environmental performance.
Yet Kenya’s construction market remains overwhelmingly conventional. Approximately 3% of construction activity was green-certified in 2021, according to the International Finance Corporation, leaving the vast majority of new development outside recognised green-building standards. At the same time, about 60% of green finance in Kenya in 2022 came from international sources, highlighting the relatively limited role of domestic capital in funding the country’s transition.
That dependence presents a structural challenge. International climate finance can support projects and help establish markets, but a sustained transformation of Kenya’s built environment will require domestic banks, pension funds, mortgage providers, developers and institutional investors to participate more extensively.
The Finance Accelerator is intended to address that gap by bringing financial and construction-sector participants into the same process. At a Nairobi workshop held by the Global Buildings Performance Network on April 17, representatives from institutions including HFC, I&M Bank, Kenya Mortgage Refinance Company, Absa Bank, the State Department for Public Works, Architectural Association of Kenya, Kenya Property Developers Association and Kenya Green Building Society discussed mechanisms for developing a pipeline of projects that can meet both sustainability standards and lending requirements.
The challenge is not simply a shortage of demand for greener buildings. It is the difficulty of converting that demand into projects with sufficiently predictable costs, revenues, certification and risk profiles for lenders.
According to Christine Sidi Katembo of I&M Bank, the market requires bankable projects and financial products capable of responding to demand at scale. For developers, that means access to financing that recognises the potentially higher upfront costs of energy-efficient materials, renewable-energy systems, water-saving technologies and climate-resilient design. For banks, it means having sufficient information to assess whether those investments translate into lower operating costs, stronger asset performance and reduced long-term risk.
Mortgage finance is particularly important because housing represents a large share of the built environment and household wealth. Kenya Mortgage Refinance Company has identified the development of a consistent pipeline of certified, bankable projects as a prerequisite for scaling green lending.
The financing challenge also intersects with affordability. Green buildings are sometimes associated with premium developments because energy-efficient technologies and certification can increase upfront costs. But the economic benefits of efficient buildings, lower energy and water consumption, improved resilience and potentially lower operating costs can be significant over the life of an asset.
The question for policymakers and financiers is therefore how to ensure those benefits are reflected in financing structures without pushing sustainable housing beyond the reach of middle- and lower-income households.
Consumer demand provides some evidence that the market could support such a transition. A 2023 Kenya Green Building Society survey cited by the programme found that 72% of buyers were willing to pay more for homes offering wellness features such as air filtration and green spaces. Across Africa, a separate survey found that 29% of homebuyers actively preferred green homes and were willing to pay a premium.
The larger constraint may therefore be the alignment of capital, standards and policy rather than the absence of consumer interest.
The Finance Accelerator has organised its work around four areas: financial products and instruments; standards and certification; regulation and incentives; and equity and demand. Together, these areas address the interconnected barriers that have limited the scale of green construction.
For financial institutions, the development of mortgages, construction loans and blended-finance structures could help reduce the upfront financing barrier. For developers, consistent standards and certification can make projects easier for lenders to evaluate. Regulators can influence the economics of green construction through planning requirements, incentives and building standards, while affordability measures can determine whether the transition reaches beyond premium housing.
Kenya’s existing policy framework provides a basis for this work. The National Buildings and Construction Decarbonization Roadmap aligns the built environment with the country’s Nationally Determined Contributions, Vision 2030 and the international Buildings Breakthrough agenda. The financing question is how to translate those commitments into transactions capable of attracting capital.
This distinction is important across Africa. Many countries have introduced climate strategies and green-building policies, but implementation is frequently constrained by limited domestic capital, fragmented standards, weak project preparation capacity and the higher perceived risk of emerging sustainable technologies.
The experience in Kenya illustrates why climate finance cannot be separated from financial-market development. A decarbonisation roadmap can establish policy direction, but commercial banks and investors ultimately require projects with identifiable cash flows, credible technical assessments, appropriate risk allocation and sufficient demand.
Blended finance could have a role in bridging that gap by using concessional or development capital to reduce early-stage risks and crowd in commercial investment. But such instruments are unlikely to substitute indefinitely for functioning domestic markets. The longer-term objective is to make green construction commercially investable rather than permanently dependent on concessional funding.
There is also a fiscal dimension. Climate-resilient buildings can reduce the exposure of public infrastructure and households to extreme weather, while more efficient buildings can lower energy demand. Conversely, continued investment in poorly designed and climate-vulnerable buildings could increase future costs for governments, insurers, lenders and property owners as climate-related damage becomes more frequent or severe.
Read also: https://gbpn.org/kenya-green-building-needs-finance-accelerator/
For Kenya, this makes the green-building transition relevant to housing policy, infrastructure planning, financial stability and economic productivity. Construction is closely linked to employment, manufacturing, real estate, banking and household wealth, meaning changes in building standards and financing can have effects throughout the economy.
The challenge now is execution. The Finance Accelerator will need to demonstrate that collaboration between banks, developers, government agencies and industry bodies can produce transactions rather than simply strategies and commitments. Its effectiveness will ultimately be judged by whether more green projects reach financial close, whether financing becomes accessible to a broader section of the housing market and whether measurable reductions in emissions and climate vulnerability follow.
Kenya’s experience could also offer lessons for other emerging markets facing the same disconnect between climate ambition and available capital. The underlying issue is not whether countries have identified the need for greener and more resilient buildings, but whether their financial systems can convert that objective into investable assets.
For Africa’s rapidly urbanising economies, that question is becoming increasingly consequential. Buildings constructed today will shape energy demand, household costs, infrastructure resilience and emissions for decades. Closing the green-building finance gap is therefore less about creating a specialised market for sustainable construction than about determining whether climate resilience can become a normal feature of how African economies allocate capital to the built environment.
