Kenya plans to invest Sh13.1bn in key African financial institutions
By Bashir Mohammed |
The additional capital will also support the African Export-Import (Afrexim) Bank, headquartered in Cairo, and the Trade and Development Bank (TDB), based in Bujumbura.
Kenya will increase its stake in three major entities, including the African Development Bank (AfDB), by $100 million (Sh13.1 billion).
President William Ruto made this announcement during the opening ceremony of the AfDB annual meetings held in Nairobi on Wednesday.
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The additional capital will also support the African Export-Import (Afrexim) Bank, headquartered in Cairo, and the Trade and Development Bank (TDB), based in Bujumbura.
The president emphasised that these investments are a testament to Kenya's confidence in these institutions' ability to attract more financing from both within and beyond Africa.
"We must understand that for others to believe in our institutions, we, as their owners, must believe in them first," Ruto stated. "We must invest in these institutions in order for others to do the same."
While Dr Ruto confirmed that the Kenyan government has already injected additional funds into Afrexim Bank, he did not specify the exact allocation of the $100 million.
African governments, financial institutions within and outside the continent, and several private investors own Afrexim Bank, which provides loans for trade-related projects to African businesses and governments.
Surging profits
Last year, Afrexim Bank's profits surged by 66 per cent to $756.1 million, distributing a dividend of $264 million to shareholders, which was also 66 per cent higher than the previous year.
The increased capital in AfDB, which exclusively finances African countries, will enhance Kenya’s shareholding in the leading development financier.
In the previous year, AfDB's income from loans and investments in treasury securities jumped by 123 per cent to $1.73 billion, with net income before distribution reaching a record $545 million.
"I was motivated by the impressive profits and dividends, and I believe this is a very worthwhile investment," Ruto said.
"I encourage both public and private entities to invest similarly."
African member states collectively hold a 60 per cent stake in the AfDB, with the remaining 40 per cent owned by countries like the United States, Japan, and India. Nigeria is the largest shareholder, with approximately 10 per cent.
The member countries of the Common Market for Eastern and Southern Africa (Comesa), including Kenya, own the TDB, which will also benefit from Kenya's new investment.
In addition to the $100 million investment, Kenya is committing an extra $20 million to the AfDB's concessional window, which primarily lends to fragile countries on the continent.
"This is a demonstration of Kenya’s confidence in the African Development Bank’s concessional window. For us to raise $25 billion, we need to show our commitment and belief in the investments we are making in this institution," Ruto said.
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