Private companies seeking a share of billions of shillings in global climate financing are set to face stricter scrutiny and longer approval timelines following guidelines freshly issued by the National Treasury.

The new framework governing access to the Green Climate Fund (GCF) introduces a rigorous, State-controlled approval process that all project proposals—whether public or private—should undergo before securing funding.

The GCF, headquartered in Korea, is a global financing mechanism that supports developing countries to cut greenhouse gas emissions and adapt to climate change by funding low-emission and climate-resilient projects across public and private sectors. Globally, the fund manages about $20 billion (Sh2.58 trillion).

Kenya has secured commitments of about $492 million (Sh63.52 billion) across multiple projects, including a Sh12.5 billion programme implemented with KCB Bank Kenya targeting green investments by small businesses and farmers in areas such as solar energy, clean cooking, and climate-smart agriculture.

Read: Mobilising blended finance for climate investments in Kenya

For private sector players, who have increasingly positioned themselves as key drivers of renewable energy, carbon markets, and climate-smart agriculture, the rules signal a shift toward tighter oversight and higher entry thresholds.

“The proposed project/programme should be aligned with national priorities, including the Vision 2030, National Climate Change Action Plan, National Adaptation Plan, Kenya’s NDC [Nationally Determined Contribution], GCF Country Programme and other relevant sectoral and County policies and plans,” the Treasury states in the circular.

The thrust of the rules is a mandatory ‘No Objection Letter (NOL)’, issued by the National Treasury, without which no proposal can proceed to the GCF for consideration.

The process introduces a structured, multi-stage approval pipeline, beginning with concept submission, followed by technical review, inter-ministerial committee scrutiny, and possible resubmissions, thereby lengthening timelines before projects can reach the global fund.

“The purpose of this no-objection procedure is to ensure consistency with national climate change strategies and plans and country-driven approaches and to provide for effective direct and indirect public and private sector financing by the Fund,” the Treasury states. “A no-objection is a condition for approval of all funding proposals submitted to the GCF.”

The Treasury rules, which will potentially reshape how green investments are structured and financed in Kenya, have come at a time when GCF has designated Nairobi as a regional hub for its operations in eastern and southern Africa.

Catherine Koffman, director of the GCF Africa Region, said the establishment of a regional presence is part of a broader reform agenda aimed at improving efficiency and impact. “Being closer means problems can be dealt with as they come up, instead of going back and forth across continents,” she said last month.

Despite the decentralisation, the GCF maintains that funding decisions remain country-driven, meaning governments, including Kenya, retain control over which projects are prioritised and submitted for financing.

The Treasury rules further require that foreign firms should also demonstrate that their projects deliver value that local institutions cannot achieve.

The guidelines push for stronger roles for domestic Direct Access Entities, requiring foreign-backed or multinational proposals to justify their participation and partner with local executing entities.

“In order to empower Direct Access Entities (DAEs), the project/programmes proposed by International Accredited Entities (IAEs) or Regional Accredited Entities must demonstrate access to resources well beyond what the DAEs can access,” the Treasury states in the circular. “For multi-country projects, Kenya shall consider participation in projects/programmes involving no more than seven participating countries, or in cases where the project demonstrates a clearly articulated value proposition to Kenya, evidenced by a significant allocation of the overall project value towards Kenya-specific investments.”

Read: New rules, law reforms position Kenya as a green investment hub

The Treasury has set a one-month window for committee review, but projects deemed misaligned can be rejected outright, with applicants given two months to revise and restart the process.

The circular underscores the stakes, warning that “if the NDA concludes that the Concept Note is not in line with Kenya's priorities, the NDA [National Designated Authority] will notify the applicant that the application has been rejected”.

For private firms operating in fast-moving sectors such as renewable energy and carbon credits, these timelines could prove costly, especially where global funding cycles and investor expectations demand speed and predictability.

The guidelines also impose stricter due diligence requirements, including proof of co-financing, assessment of debt implications, and demonstration that projects do not duplicate existing initiatives. While these measures aim to improve efficiency and accountability in the use of climate funds, they also increase the documentation and structuring burden on private developers.

→cmunda@ke.nationmedia.com

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