Kenya’s push to build a more sustainable and resource-efficient economy is facing fresh strain as global development partners scale back funding, tightening the flow of grants and concessional financing that have long supported climate and waste-management projects.
- •In an interview with The Kenyan Wallstreet, Venkat Kotamaraju, Partner & Director (Circular Economy and Climate Solutions), Intellecap Advisory Services has warned that global grant capital is no longer a dependable foundation for Africa’s climate and waste enterprises.
- •The question is whether the Kenya's momentum in plastics and waste regulation can now unlock domestic capital, pension funds, commercial banks and local investors, to fill the emerging aid gap.
- •Kotaramaju is calling for a unified institutional framework that gives commercial banks and development finance institutions confidence to evaluate circular economy risks properly.
“We do realise that there is a significant chunk of aid capital that is not available now,” he said, referencing cuts and reprioritisations in traditional donor markets, including the US. “When I say shrinking, it could also be shifting.” The shift, he argues, is structural not cyclical.
“To me, the key inflexion point is how we move from a market mechanism which is aid-dependent to becoming trade-heavy,” he added.
Climate mitigation is embedded in supply chains, from plastics to food systems and electronics. And in Africa, those supply chains are largely built on micro, small and medium enterprises (MSMEs), many operating informally.
“We know that most of the employment in Africa happens across these supply chains,” he said. “Circularity has a significant role to play in how we can create better livelihoods for the future.”
Yet most of those enterprises do not meet conventional banking thresholds.
“Having capital is not the same as deploying it,” Kotamaraju noted. “Many circular economy businesses simply do not fit into the fixed criteria that investors and financial institutions have considered for the longest period of time.”
Kenya’s opportunity, he argues, lies in using the global funding reset as leverage. Rather than abandoning concessional funding, Kotamaraju proposes redesigning it.
“What can we do to make capital available, applicable, accessible and affordable?” he said, outlining what he calls the “four A’s” of capital design.
His preferred model converts grants into repayable or recyclable instruments, effectively zero-interest facilities tied to business milestones.
Instead of one-off disbursements, funds are released in tranches linked to performance outcomes. Once enterprises reach revenue and profitability thresholds, capital is returned to a pooled facility and redeployed to new businesses.
“The funds don’t go back to the original grant provider,” he explained. “But once enterprises grow, they return that capital, and the same pool can be recycled into other enterprises.”
The model has been applied in food systems financing and is now being explored for plastics and electronic waste.
Capital redesign alone, however, will not suffice. Regulatory clarity must accompany financial innovation. Kotamaraju argues that policy needs to shift from a compliance lens to an incentive framework.
“How might we look at policy not just as a top-down compliance tool,” he asked, “but as something that incentivises participation?”
Globally, the pool of patient, high-risk capital is tightening amid fiscal pressures in donor economies. “There’s a lot of global shifts happening,” Kotamaraju said. “The pool of patient risk capital might be shrinking.”
But he rejects pessimism. “It’s not a doom or gloom picture,” he said. “I paint this as an opportunity.”
“Even if you look at grants, how do we imagine grants in a way that they can be designed and deployed to create a multiplier effect?” he asked.
