Kenya to inject $100m in AfDB, two other African multilateral lenders
Wednesday May 29 2024
President William Ruto makes his speech during the official opening of the 59th Annual Meetings of the African Development Bank Group and the African Development Fund at the Kenyatta International Convention Centre in Nairobi on May 29, 2024. PCS
Kenya will increase its shareholding in three key African financial institutions, including the African Development Bank (AfDB), by $100 million as a show of confidence in efforts to solve the continent’s problems.
President William Ruto on Wednesday said at the opening ceremony of the AfDB annual meetings in Nairobi that the extra capital injection would also go to the Cairo-headquartered African Export-Import (Afrexim) Bank, and the Bujumbura-based Trade and Development Bank (TDB).
The new investments are meant as a show of confidence in the institutions to help mobilise more financing from within and beyond the continent, according to Dr Ruto.
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“Nations in this continent, we must begin to understand that if others are to believe in our institutions, we must believe in them first, as the owners...We must believe in ourselves for others to believe in us, and we must invest in these institutions for others to invest in them,” he said.
He said the Kenyan government has already made additional investments in the Afrexim Bank but fell short of breaking down how much of the $100 million went to the continental trade financier.
Afrexim Bank, which lends to African businesses and governments for trade-related projects, is owned by the African governments, financial institutions within and outside the continent, as well as several private investors.
Last year, its profit rose 66 percent to $756.1 million paying out a dividend of $264 million, also an increase of 66 percent from the amount paid out to shareholders in 2022.
Additional capital in AfDB, which lends exclusively to African countries, will boost Kenya’s shareholding in the premier development financier.
Last year, AfDB’s earnings from loans and investments in treasury securities rose 123 percent to $1.73 billion, while its net income before distribution rose to $545 million, the highest ever in the history of the bank.
“I was motivated by the profits I saw and the dividends that will be paid, and I think it’s a very worthwhile investment and I want to encourage public and private entities to equally invest,” Dr Ruto said.
African member states hold 60 percent of the AfDB, with the United States, Japan and India, among others owning the remaining 40 percent stake. Nigeria is the biggest shareholder with about 10 percent.
TDB, which will also benefit from the new financing from Kenya, is owned by the member countries of the Common Market for Eastern and Southern Africa (Comesa), including Kenya.
In addition to the new $100 million investment, Kenya is also committing an extra $20 million to the AfDB concessional window, which is used mostly to lend to fragile countries on the continent.
Dr Ruto said this is “a demonstration of Kenya’s confidence in the African Development Bank’s concessional window.”
Read: AfDB cushions indebted poor states
“It is a demonstration that for us to raise $25 billion, we need to demonstrate our commitment and belief in the investment we are making in this institution,” Dr Ruto added.
