Kenya eyes green finance to boost climate-smart construction

Environmentally, green buildings help reduce energy consumption through efficient designs. [Courtesy]

Green buildings offer a range of environmental, economic and social benefits. Among the health advantages are improved indoor air quality through better ventilation and the use of non-toxic materials, resulting in enhanced comfort and healthier living conditions.

Environmentally, green buildings, also known as sustainable or eco-friendly buildings, help reduce energy consumption through efficient designs that lower electricity and fuel use. They also cut carbon emissions and promote water conservation.

These buildings further provide significant economic benefits, including lower operating costs, increased property value, reduced maintenance expenses and access to incentives and tax benefits through government support for green construction projects.

However, despite these advantages, such as cost savings, environmental protection, healthier living and working spaces, several challenges continue to hinder the adoption of green buildings.

It is for these reasons that the Kenya Green Building Society (KGBS) organised a workshop titled Green Building Standards and Certification as a Finance Enabler, whose aim was to boost green building finance and support related policy reforms.

The workshop forms part of the Green Buildings Decarbonisation Funding Accelerator, whose delivery is aligned with the implementation of Kenya’s National Buildings Decarbonisation Roadmap, led by the State Department of Public Works under the UHAI Coalition.

The event brought together financial institutions, developers, policymakers and built-environment experts to explore how green building standards and certification systems can strengthen risk assessment and underwriting, unlock green finance products and accelerate investment in low-carbon and climate-resilient buildings.

Financing, limited data and low awareness emerged as key challenges during the workshop which included Chief Executive Officer of the Kenya Green Building Society, Nasra Nanda.

The stakeholder workshop focused on exploring how green buildings can be financed through certification.

She notes that the workshop was informed by the need to first understand the current state of the market.

Nanda explains that Kenya is at a critical turning point in mainstreaming green building standards. “However, for this sector to grow, it must be supported by financing mechanisms that incentivise the transition to green development, whether through project financing, government support, or enabling professionals in the market,” she says.

The meeting also marked an important milestone in advancing the implementation of Kenya’s decarbonisation roadmap through the Building the Transition Programme, a global initiative of the World Green Building Council, with KGBS leading national implementation.

Nanda reveals that the programme aims to support local stakeholders such as banks in developing green financial products, assist the government in convening stakeholders and translate strategy into policy and measurable market outcomes.

 Developers and professionals also expressed concerns about complex financing requirements and difficulties in accessing green finance.

Stakeholders have also begun co-creating solutions aimed at developing a funding strategy and a comprehensive report to support government and partners, with the goal of positioning Kenya as a leader in African solutions for sustainable investment. However, Nanda says, the first step is to clearly define these challenges.

On the uptake of green buildings in Kenya, she discloses that although updated figures are not yet available, more than one million square metres of certified green space had been achieved by June last year, with further growth expected.

Updated statistics are expected to be released soon.  She adds that for developers targeting global tenants or premium markets, green certification enhances competitiveness, while financial institutions are increasingly prioritising green investments.

From a consumer perspective, Nanda reveals, younger generations, particularly Gen Z and millennials, are driving demand for energy-efficient, technology-enabled, and environmentally conscious living spaces.

Deputy Director of Building Safety and Coordinator for Buildings and Climate in the State Department for Public Works, Kennedy Matheka, says various stakeholders have been instrumental in transitioning the sector from conventional practices toward sustainability.

He says, from a government perspective, progress has been steady for over a decade, as the sector shifts from traditional construction methods to sustainability, in line with Kenya’s commitment to the 2030 Sustainable Development Agenda.

To address existing barriers, the government has developed a roadmap of reforms.

“The government has introduced a Green Incentive Policy (2025), covering the wider public sector. Sector-specific proposals are now being developed for submission to the National Treasury for consideration. This stakeholder engagement process is part of strengthening that case for incentives,” Matheka says.

Matheka explains that lack of data to backup the progress largely stems from manual systems used in the building approval process.

“The sector involves multiple actors, including counties, regulators, professionals, banks and insurers, making data collection fragmented and inconsistent,” he explains.

To address this, the government is stablishing an e-building permitting and approval system. The national digital platform is expected to integrate all stakeholders, improve data availability and streamline approvals.

Matheka notes that the process has taken time due to stakeholder consultations but is expected to become operational within the next year.

Project Manager for the Green Finance Accelerator Programme, John Kabuye, explains that financing has emerged as a major challenge for sustainable buildings because sustainability information has traditionally existed separately from financial data.

“Green building performance data often exists separately from financial information, making it difficult for lenders to assess investment viability. Without this integrated data, capital flows into green projects remain limited,” he says.

Kabuye says efforts are now underway to bridge this gap by increasing awareness among developers and ensuring the benefits of green buildings, such as lower utility costs and improved asset value, are clearly communicated.

He observes, many developers still do not fully understand these benefits or how to place value on them, making it harder for potential buyers to appreciate the value of sustainable buildings.

 Kabuye assures that green buildings can support faster project uptake because they offer significant advantages to occupants, including lower electricity and water bills, both of which continue to rise.

“If you are able to sell a product that offers lower electricity and water costs, people will naturally be more attracted to it,” he says.

He also cites the failure to adequately inform tenants about the benefits of green buildings, noting that landlords are often too focused on filling spaces to educate tenants about long-term savings.

“For landlords who own and develop green-certified buildings, it is important to communicate the difference clearly. A conventional building may consume a certain amount of energy and water, which translates into high monthly utility expenses. However, a green building can significantly reduce those costs,” he advises.

Kabuye explains that this matters because tenants pay utility bills directly to service providers rather than landlords. If tenants understand that living in a green building can reduce their monthly expenses, they are more likely to choose such properties.

He adds, once tenants experience these benefits in one green-certified property, they are more likely to seek similar features when moving to another property.